DOE/EIA-0609(96)

Distribution Category UC-950

Privatization and the Globalization of 

Energy Markets

October 1996

Energy Information Administration

Office of Energy Markets and End Use

U.S. Department of Energy

Washington, DC 20585

This report was prepared by the Energy Information Administration, the independent statistical and analytical agency within the

Department of Energy. The information contained herein should not be construed as advocating or reflecting any policy position of

the Department of Energy or any other organization.
ii Energy Information Administration/ Privatization and the Globalization of Energy Markets 

Contacts

This report was prepared in the Office of Energy Markets Chief of the Financial Analysis Branch (202-586-1445).

and End Use of the Energy Information Administration, Specific technical information concerning this report may

U.S. Department of Energy, under the general direction of be obtained from Kevin Lillis at (202-586-1395) or Jon A.

W. Calvin Kilgore. General questions concerning the con- Rasmussen at (202-586-1449). The following authors content of the report may be referred to Mark E. Rodekohr, tributed to this report: Neal Davis (Chapter 3 and 5),

Director of the Energy Markets and Contingency Infor- Karen Doucet (Chapter 4), and Kevin Lillis (Chapters 1, 2,

mation Division (202-586-1130), and Mary E. Northup, 5, and 6).

Diskette Information

An appendix to this report is available in a Lotus wk3 format on a 3.5-inch high-density diskette. The appendix contains

an extensive and detailed matrix of recent energy privatizations by country, by company, and by the function of the

energy operation involved (e.g., coal operations or electricity generation operations). Please contact Kevin Lillis of the

Energy Information Administration. Telephone (202) 586-1395, Fax (202) 586-9753, or by electronic mail through the

INTERNET, klillis@eia.doe.gov.
Energy Information Administration/ Privatization and the Globalization of Energy Markets iii

Contents

Executive Summary .....................................................................................v

Introduction ............................................................................................. 1

1. Privatization: Motives and Methods ..................................................................... 3

The Evolution of Privatization ......................................................................... 3

Privatization as a Global Phenomenon ................................................................. 4

The Legal and Political Environment of Privatization ................................................... 4

Dimensions of Privatization ........................................................................... 5

Methods of Privatization .............................................................................. 5

Investment Vehicles .................................................................................. 6

2. Profiles of Petroleum Privatizations in OECD Countries ................................................. 9

The United Kingdom ................................................................................. 9

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3. Latin American Petroleum Privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Trinidad and Other Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4. Privatization in Socialist and Formerly Socialist Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Caspian Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Eastern Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

China and Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

5. Privatization and the Genesis of the Multinational Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Underlying Factors and Regional Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

The United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Finland, Norway and Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

France, Italy, and Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Hungary, Poland, Russia, and Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

China, New Zealand, Indonesia, Phillippines, and Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
iv Energy Information Administration/ Privatization and the Globalization of Energy Markets 

Contents

5. Electric Power Globalization and the Genesis of the Multinational Power Company Cont’d

Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Colombia and Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Brazil, Mexico, and Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

The Dominican Republic and Trinidad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

6. Recent Trends in International Investment and Trade in Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

The United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Colombia and Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Appendix

Worldwide Privatization—Motivated Energy Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Tables

1. Worldwide Company Rankings for the Largest Latin American Petroleum Companies . . . . . . . . . . . . . . . . . . 14

2. Eastern Europe Petroleum Statistics for 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3. New Power Plant Capacity Required Outside North America by 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

4. The Structure of the Electricity Market in the United Kingdom and Recent Privatization - 

 Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

5. Major Foreign Equity Investments in UK Independent Power Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

6. Major UK Regional Natural Gas Pipeline Privatizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

7. Australian Electric Utility Privatization-Related Mergers, Acquisitions, and IPP’s . . . . . . . . . . . . . . . . . . . . . . . 49

8. Latin American Electricity Investment for Argentina, Bolivia, Chile, Colombia, and Peru by 

 Company and Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

9. Electricity Privatization Investment in Brazil, Mexico, and Venezuela, by Company and Country . . . . . . . . . 54

10. Electricity Privatization Investment in Costa Rica, Dominican Republic,Ecuador, El Salvador, Guatemala,

 Honduras and Trinidad, by Company and Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

A1. Matrix Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

A2. Privatization-motivated Investment in OECD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

A3.Privatization-motivated Investment in Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

A4. Privatization-motivated Investment in Socialist and Formerly SocialistNations . . . . . . . . . . . . . . . . . . . . . . . . . 87

A5. Privatization-motivated Investment in Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

A6. Privatization-motivated Investment in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Energy Information Administration/ Privatization and the Globalization of Energy Markets v

Executive Summary

The privatization of state-owned industry is a develop- Privatization has been widespread in electrical power

ment of historic dimensions. For many nations, their generation, transmission, and distribution as well as in

formerly-state owned energy companies have been among natural gas transmission and distribution. In Latin

the largest of companies to be privatized. Energy America and the United Kingdom, privatization of electric

companies that have been privatized include some of utilities and natural gas utilities has been mainly

world’s largest petroleum companies based in the responsible for the emergence of new classes of investors,

industrialized nations. Global giants, such as British new hybrid energy companies, new investment financing

Petroleum, British Gas, Elf Aquitaine (France), ENI (Italy), vehicles, and massive cross-border investments. 

Petro Canada, Repsol (Spain), and TOTAL (France), have

all recently undergone transitions from state-owned to

some significant degree of private ownership. Other large

petroleum companies lie in the countries of the Former

Soviet Union and in Latin America, and have also been

moving towards private ownership. These privatization

efforts have led to billions of dollars in new investments

and have presented opportunities to add oil and gas

reserves of a magnitude unseen since the discovery of the

North Sea and Prudhoe Bay fields. 

Since the means by which different countries have privatized state-owned industries have varied considerably, we

treat privatization in this report as any movement toward

a market-driven economy--or any movement that

diminishes public ownership and control and increases

private ownership and control. 

Privatization presents several concerns to shareholders,

energy analysts, energy companies, policy makers, and to

the general public at large. The opening of previouslyclosed overseas energy investments raises a number of

issues. For example, for U.S. companies investing in newly

-privatized energy activities abroad, in many cases,

political risk has been a dominant element in

privatization-related investment decisions. Often times,

individual companies have committed hundreds of

millions of dollars to these investments with serious

uncertainty over even the short-term prospects of such

projects. This development is one also watched carefully

by shareholders and investment analysts.

For U.S. policy makers, the impact that privatization

might have on maintaining a secure and affordable

energy supply to U.S. consumers is also of importance. As

more and more U.S. companies enter into foreign energy

investments (often for the first time), the effects such

investments will have on these companies’ financial

health and their domestic operations become another area

of concern for policy makers.

This report discusses recent efforts at privatization in

petroleum, electricity, and coal, as well as the impetus

that privatization has provided in fostering the evolution

of the multinational and multidimensional energy

company. Of particular note:

& Privatization in such countries as the Former Soviet

Union, and other formerly-socialist nations, has

clearly widened the scope of the major petroleum

companies to include previously off-limit exploration and development areas.

& Privatization has also fomented the greater integration of traditional petroleum companies into

electric power, and the convergence of the electric

power and natural gas industries.

There are both geographic and energy specific dimensions

to privatization, both of which have served to form the

outline of this report. The following sections highlight

privatization efforts among global regions and forms of

energy.

Privatization of Non-U.S. OECD 

Petroleum Companies

Relative to other energy companies surveyed in this

report, privatization of the major oil companies located in

countries belonging to the Organization for Economic

Cooperation and Development (OECD) has caused only

modest changes in industry behavior. Traditionally,

OECD governments have exerted a much more limited

degree of control over their nationalized petroleum

companies than government in most other regions.

Although many of the OECD’s petroleum giants have

until recently been publicly held, in many ways even

these companies have operated almost as autonomously

as some of the world’s privately-held petroleum

companies. Thus far, the most pronounced impact of

privatization may be the increased level of ownership of
vi Energy Information Administration/ Privatization and the Globalization of Energy Markets 

several formerly-state run petroleum companies by Foreign investment in Russia had long been put on hold,

foreign investors--particularly those from the United largely due to delays in the passage of a property rights

States. For many of these recently-privatized petroleum law. Even after the legislation, the Oil and Gas Law, was

companies, reduced government oversight may have also enacted, apprehensions over the survivability of Russian

freed management to pursue such politically sensitive democracy (and corresponding economic reform)

decisions as redirecting investment spending overseas, continued to discourage foreign investment. In the

and undertaking downsizing initiatives, particularly Caspian Sea area, which includes Azerbaijan and

where reductions in labor force have taken place. Kazakhstan, in addition to Russia, delays in reaching an

Privatization of Latin American 

Petroleum

Latin America is an area of rapidly growing exploration

and development activity for U.S. energy companies.

Privatization of petroleum operations in Latin America

has occurred against a backdrop of sweeping free market

economic reform. Central to Latin American economic

reforms has been the privatization of a range of stateowned industries--from phone companies, to natural gas

and electric utilities, to petroleum companies. The various

countries of Latin America, however, have pursued

different routes to privatization. At one extreme lies

Argentina, which completely privatized its formerly-state

owned petroleum company, YPF. At the other end of the

spectrum lies Mexico, which has largely maintained its

state-owned petroleum monopoly, Pemex, although

allowing more latitude to foreign investors in Mexican

petrochemicals. In general, privatization has allowed

Latin American companies more freedom to pursue joint

ventures with foreign companies. It has also led to an

upswing in overall Latin American petroleum investment

and may have encouraged the acquisition of some Latin

American petroleum companies by foreign firms as well

as the acquisition of foreign companies by some Latin

American firms. 

Privatization Efforts in Eastern 

Europe and Socialist Asia

In most Communist and former-Communist countries, the

regimes recognize a need to rebuild their economies and

are currently in a period of transition as they begin to

adopt various market reforms. Each regime has embarked

upon its own unique petroleum privatization scheme,

allowing for different industry and ownership structures

to emerge. 

Privatization in Russia has involved both the creation of a

domestic (and largely privately-held) industry out of the

former state-owned petroleum monopolies and the

opening up of Russian petroleum to foreign investors.

agreement on the route of an export pipeline (due to

political differences among the nations involved) has held

up billions of dollars in upstream investment in this

region. 

In other eastern European countries, privatization of

petroleum has largely been a downstream affair. With the

exception of Romania, eastern Europe has little in the way

of petroleum production. Several eastern European

nations have allowed foreign petroleum companies to

invest in petroleum refining and marketing operations.

The Communist governments of China and Vietnam are

also attempting economic reform, albeit while retaining a

monopoly hold on political power. Recent reforms in

China and Vietnam include opening up areas for petroleum exploration that were previously inaccessible to

foreign participation. Most of the resulting foreign investment in these countries is in the way of joint ventures and

production-sharing agreements, and investment in petroleum exploration and development activity has proceeded

at a uneven pace. Political uncertainties and legal difficulties remain the largest impediments to investment in

these countries. 

Global Power Privatization

Many developing countries are facing imminent power

shortages as a result of rapid future growth in the demand

for electric power. The future power generation needs of

populous countries, such as Brazil, China, India, and

Indonesia, are immense and present investment demands

beyond the financial means of domestic capital markets.

In the developing nations, privatization has largely

involved the construction of new generating capacity and

transmission lines. Foreign companies participating in

these privatization efforts come from a variety of countries

and represent a variety of industries. 

In Latin America, privatization of electricity generation

facilities has been widespread. Argentina has been a

leader in the privatization of electric power, as it was in

petroleum. Latin American electricity privatization has

been primarily driven by a rapid increase in electricity

demand, coupled with a shortage of domestic capital to

meet future electric power generation investment needs.

Privatization has involved both the sale of power opera-
Energy Information Administration/ Privatization and the Globalization of Energy Markets vii

tions to investors (both foreign and domestic) and agree- privatized water utilities and recently-privatized electric

ments to allow incremental private investment (both utilities have been combined. Another result of privatiforeign and domestic) in new electric facilities. Prominent zation has been the large-scale entry of foreign companies

among foreign investors are a number of U.S. electric utili- into these industries, largely through mergers and

ties as well as some non-U.S. foreign utilities. Several acquisitions. In both Australia and the United Kingdom

petroleum companies have also entered the Latin Ameri- (UK), U.S. investors--particularly U.S. electrical utilities--

can electricity market. have been the most prominent foreign investors. 

In Latin America, the privatization of electric utilities is

related to the privatization of natural gas exploration and

development operations. The emergence of a regional

natural gas transportation system is critical to the development of new natural gas-fired electricity generation units.

As a consequence, many international petroleum companies (particularly those with substantial natural gas

production and transportation businesses) have vertically

integrated themselves further downstream towards

electricity generation in several Latin American countries.

Developed countries have also taken steps to privatize

their electric power sectors. The most far-reaching of these

privatizations have occurred in Australia and the United

Kingdom. The evolving energy industries, as a result of

privatization, have grown more integrated—both

horizontally and vertically. In the United Kingdom, full

service companies providing power generation and

distribution, along with natural gas production and

distribution, have emerged. In a few cases, recentlyCoal Privatization

The privatization of the coal industries in Germany and

the United Kingdom has had a decided impact on coal

investment both in Europe and overseas. The removal of

coal subsidies (an act of privatization) by these two European nations is largely responsible for the constriction of

their domestic coal industries and the redirection of

billions of investment dollars from coal operations in the

United Kingdom and Germany to coal operations

overseas. Well established producing countries, such as

Australia and the United States, have been large beneficiaries of this redirected investment capital. Significant

emerging coal-producing countries, such as Colombia and

Venezuela, have also seen an increase in foreign investment in domestic coal operations, a fact which could result

in these nations becoming substantial coal exporters.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 1

 Introduction 

Privatization and the Globalization of Energy Markets reviews Energy Markets, expands the coverage of that effort in a

recent global efforts to privatize energy resources and number of ways. The group of energy companies studied

outlines the opportunities and challenges privatization in this report includes not only the major U.S. petroleum

has presented to U.S. and foreign multinational energy companies but also many major foreign companies. The

companies. latter group consists of both state-run energy enterprises,

Scores of nations are privatizing their state-owned energy multinationals that have long been privately held. The

companies. For several reasons this development should privatization of non-petroleum energy industries, such as

be of particular importance to U.S. investors, energy electricity generation and transmission, natural gas

analysts, energy policy makers, and energy producers and transmission, and coal mining, are also discussed in this

consumers. U.S. companies often have been key sources of report, as are the overseas investments made by electric

financing the privatization of many foreign energy companies, natural gas companies, and coal companies.

companies, a development of concern to both investors The regional coverage of the current report has also been

and policymakers. Policymakers in this country can also expanded to include, for example, privatization efforts in

benefit from analysis of the various means by which such areas as non-FSU Europe, the OECD, and a number

different countries have adopted different privatization of developing countries.

schemes. For instance, the far-reaching efforts at energy

privatization in the United Kingdom have often been held Energy privatization is a large development and is taking

up as a case study for other countries considering energy place in more countries than those covered in this report.

privatization. Privatization will also play a major role in The purpose of this report is to highlight some of the more

determining the availability of future energy supplies and important privatization efforts occurring in global energy.

prices--a concern to both energy producers and con- For instance, since the late 1970's the United States has

sumers. undertaken a series of efforts to deregulate domestic

The study of recent energy privatization efforts can be thoroughly in other Energy Information Administration

approached from several viewpoints. There is a regional publications, and hence is not addressed in this report.

aspect to privatization. For example, in Latin America There are several other dimensions to global energy

energy privatization efforts can be viewed as a sweeping privatization that fall outside the purview of this report.

regional adoption of free market economics. However, For instance, many foreign countries have adjusted their

there is also an energy sector perspective to privatization. tax regimes to enhance the competitiveness of their energy

For instance, while some nations have welcomed freer industries, which also is a form of privatization. Although

foreign investment in energy sectors, such as petroleum this report often makes reference to energy related

refining or marketing, some have remained reluctant to investments that are generally deemed to be relatively

offer the same level of unrestricted investments in the risky, it is beyond the purpose of this report to quantify

petroleum production sector. Further, there is the risk. Further, whatever disadvantage U.S. companies face

perspective of the energy enterprise, or the nature of the relative to many of their newly-privatized major

company being privatized, since the privatization of competitors (due to such factors as embargoes and other

companies such as British Petroleum differ markedly from trade restrictions) also falls outside the scope of this

the privatization of, for instance, the oil companies of the report.

Former Soviet Union. 

In early 1996, the Energy Information Administration chapter addresses the economics of privatization--what

publication Performance Profiles of Major Energy Producers motivates countries to privatize, and what countries and

1994 took an initial look at the privatization of state- companies hope to gain from it. The second chapter

owned energy industries in China, Latin America, and the discusses petroleum privatization efforts among non-U.S.

Former Soviet Union (FSU), and the opportunities that OECD nations. The third chapter reviews petroleum

these privatizations presented to the major U.S. petroleum privatization efforts in Latin America. The fourth chapter

companies. That report focused primarily on petroleum

investments. This report, Privatization and Globalization of

recently privatized energy enterprises, and foreign

energy markets. This effort, however, is described

This report is organized along the following lines. The first
2 Energy Information Administration/ Privatization and the Globalization of Energy Markets 

looks at privatization in socialist and former socialist recent developments surrounding the privatization and

regimes. The fifth chapter reviews privatization efforts in globalization of world coal. Lastly, the appendix

global electric power generation, transmission, and provides the reader with a reference source of

distribution industries. The sixth chapter discusses summarized information.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 3

“Economic Change Social Upheaval; Governments Cutting Welfare Benefits, Selling State-run Firms,” The Washington Post (August 7, 1994), p. A1. 1

“British Labor Party Scraps nationalization Clause,” The Wall Street Journal (May 1, 1995), p. A11. 2

1. Privatization: Motives and Methods

The Evolution of Privatization

Energy privatization has been part and parcel of a recent elsewhere in Europe—although in other nations often by

world trend which has placed greater reliance on market more freely-elected governments.

forces and less dependence on government in the

allocation of resources. Since the means by which different In other regions, nationalization often involved the exprocountries have privatized state-owned industries have priation of foreign-owned domestic petroleum properties.

varied considerably, we treat privatization in this report Russia was the first to nationalize its petroleum industry

as any movement toward a market-driven economy—or following the Bolshevik Revolution in 1918. In 1938,

any movement that diminishes public ownership and Mexico nationalized what was at the time an industry

control and increases private ownership and control. largely held by U.S., UK, and Dutch interests. Later waves

In part, privatization’s roots stem from the recent decline post-war era in Latin America and the Middle East.

of socialism as well as from the growing conviction that

free enterprise advances the wealth of nations better than However, in the West, by the late 1970's, nationalized

nationalized industries and planned economies. Both industries began to lose favor. Disenchantment with state

mixed-market and socialist (or formerly socialist) econo- ownership grew as government enterprises began to be

mies have engaged in various privatization efforts in perceived as bloated and inefficient. This view caught on

recent years. with liberal and conservative parties throughout the

Privatization represents a reversal of the process of the abolishment of the labor party’s constitution clause

nationalization begun early in this century. In most calling for the nationalization of industry—long one of the

Communist nations, a wave of nationalizations ensued bedrocks of the British labor movement’s constitution.

shortly after Communist governments assumed power in Other liberal parties have also embraced privatization. As

the aftermaths of World War I (WWI) and World War II a result of this historic change in attitude toward state-

(WWII). In Western Europe, the nationalization process ownership, such companies as Repsol and ENI—along

stretched over several decades but essentially took hold in with a host of other formerly state-owned companies—are

the 1930's. At the time, European governments of now being privatized.

divergent political viewpoints were largely in agreement

over the benefits of a strong state role in their domestic In the East, the collapse of Communism precipitated later

economies. “Nationalization represented a cherished post- efforts to adopt market economies and privately-held

war European ideal to create large vigorous state-owned industry. Even among still avowedly socialist regimes,

businesses that provided pools of public jobs and allowed such as China, a move to free market-based reforms and

European politicians to wield influence over their privatization has been evident for several years.

economies. A wide consensus of European politics after

held that a strong, government-owned industrial sector Among the developing countries, privatization has also

was necessary for prosperity and middle-class stability.” been widespread. With the exception of Cuba, virtually 1

In the 1930's Spain, the Franco government nationalized all of Latin America has adopted some form of privatithe state petroleum resources, which later emerged as zation. Chile—Latin America’s pioneer at privatization—

Repsol—Spain’s state oil company. The Mussolini and, later, Argentina, Peru, and Colombia have

government in Italy did the same and formed what was to

become ENI, Italy’s state petroleum company. Energy

resources were nationalized at about the same time

of nationalizations (and expropriations) followed in the

world. Recently, the British labor party leader called for

2
4 Energy Information Administration/ Privatization and the Globalization of Energy Markets 

The World Bank Report of 1994, The World Bank (New York, Oxford University Press, 1995). 3

“Sale of the Century,”The Wall Street Journal (October 2, 1995), p. R4. 4

“Sale of the Century,” The Wall Street Journal (October 2, 1995), p. R4. 5

“Sale of the Century,” The Wall Street Journal (October 2, 1995), p. R4. 6

The objectives of privatization appeared in: Privatization: Learning the Lessons from the U.K. Experiences (London, U.K., Price Waterhouse, 1989). 7

However, objective number two, “to raise investment capital for the privatized industry or company," was added by the authors of this report.

undertaken the most ambitious privatization efforts.

Among developing Asian nations, electric power privatization has been most prominent in countries such as

Pakistan, the Phillippines, Malaysia, and Indonesia. The

two most populous nations of Asia, China and India, have

also embarked on various forms of energy privatization.

Privatization as a Global

Phenomenon 

Privatization has also been driven by the increasing

globalization of the world economy. Several decades of

rapid growth in international trade and investment have

made competitiveness in international trade an essential

factor in a nation’s ability to create jobs, raise real wages,

and generate wealth.

For many nations, privatization has become the only effective method of raising investment capital on favorable

terms. High levels of past public sector borrowing have

saddled many nations with large levels of debt. As a consequence, these nations have had little recourse but to sell

state assets to reduce debt, generate revenue, and raise

investment capital.3

Countries as different as the United Kingdom and Chile

have led the way in privatization. Countries as different

as Peru and Poland have followed. Between 1988 and

1993, roughly 2,700 state-owned enterprises in over 95

countries were transferred to private individuals, raising

over $270 billion. In Western Europe, the United 4

Kingdom was at the forefront of privatization. Britain has

raised $95 billion through the privatization of formerly

state-owned enterprises. 5

Various businesses have been privatized besides oil.

Indeed, the largest privatization to date has been the sale

of Japanese Telecom for $73 billion. In the United 6

Kingdom, public housing has been privatized and, in the

United States, many municipal services, such as waste

disposal, have been privatized. 

Although privatization efforts differ substantially from

country to country, there is a strong common economic

rationale underlying the various decisions to privatize

state energy resources. In general, nations have privatized

state-owned energy industries to achieve one or more of

several objectives. These objectives include: 1) raising

revenue for the state; 2) raising investment capital for the

industry or company being privatized; 3) reducing government’s role in the economy; 4) promoting wider share

ownership; 5) increasing efficiency; 6) introducing greater

competition; and 7) exposing firms to market discipline.7

Privatization is closely connected with the development of

the international energy company—a company whose

focus is becoming both more global and more multipurpose. Until recently, outside of the world’s few major

integrated oil companies, only a handful of energy

companies were considered multinational. Currently, in

addition to the scores of petroleum companies that can

now be classified as multinational, the scope of many coal

companies, petroleum pipeline companies, electric utilities, and power generation equipment and construction

companies, has become increasingly global. Through consolidations, mergers, acquisitions, and strategic alliances,

the world’s energy companies have also become more

integrated. Oil and gas companies have become electricity

companies; domestic regional electric utilities have

become multinational electricity companies; electricity

distribution companies have become generation companies; and generation companies have become distribution and transmission companies. 

The Legal and Political Environment 

of Privatization

In many regions, progress at privatizing state petroleum

companies has been uneven. Some countries’ privatization

efforts have faltered, in part due to lingering nationalistic

views towards energy resources, particularly oil. On more

than one occasion, progress at privatization has suffered

severe setbacks. For example, billions of dollars of

planned investment activity in Russia has for a long time

been put on hold awaiting passage of a property rights

law. A growing possibility that a Communist led government might regain power has been another factor causing

foreign investors to be apprehensive about their investment commitments in Russia.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 5

The New York Times (August 4, 1995), p. D2. 8

"Enron Pursues Arbitration in Dispute Over Project Canceled by Indian State,” The Wall Street Journal (August 7, 1995), p. B6A. 9

Further, the specter of re-nationalization has not been the case of gradual privatization. Even in the most farlimited to the new democracies of Eastern Europe. In reaching privatization efforts—such as in the United

August of 1995, for instance, the newly-elected state Kingdom—several years have gone by between the time

government of Maharashtra, India, temporarily pulled out government committed itself to privatizing industries and

of a deal negotiated by the central government with Enron the full transfer of ownership to the public.

to build and operate a $3-billion electricity generating

plant after Enron and its partners had already invested The role of the foreign investor has been an important

several hundred million dollars. The newly-elected factor in the privatization process. In some political 8

government alledged that the previous government had jurisdictions, few, if any, restrictions have been placed on

secretly negotiated the contract with Enron under terms foreign investors. In the Australian state of Victoria, for

that favored Enron and disadvantaged consumers. instance, when five of the state’s electric distribution 9

Subsequently, in December of 1995, Maharashtra and companies were auctioned off, all were purchased, at least

Enron successfully reached a renegotiated agreement in part, by U.S. companies. Countries such as the United

allowing the project to proceed. Kingdom and Argentina have also been at the forefront in

Privatization almost always involves some changes in a investors. In other cases, restrictions on foreign investment

nation’s legal system. In several regions, legal reform has have been inhibiting. Several of the former Communist

been an important key to the successful privatization of regimes, for example, along with China, have undertaken

state-owned industries, especially with regard to the relatively moderate and often vacillating steps towards

protection of property rights and the reliable enforcement opening their energy sectors to foreign investment. In

of contracts. The equal treatment of foreign investors and general, these countries have relied on joint ventures with

domestic investors by the judicial system has also been state-controlled enterprises as an approved vehicle for

important. foreign investment in their energy industries.

Dimensions of Privatization

Privatization efforts are occurring in several different

regions, nations, and industries. Although some clear

patterns have emerged, there are many different forms

and variations of privatization. One example of an

aggressive attempt at privatization is when a government

completely divests itself of all state-owned enterprises to

the public and fully removes itself from the control and

management of these enterprises. There are also several

less substantial forms of privatizing. At the other extreme,

a government may implement a deregulatory policy

which allows an industry only a marginal amount of

greater autonomy or may just contract out a service that

was formerly performed by government workers, such as

trash collection. Privatization can also be achieved without

doing much of anything. If, for example, the private sector

is growing while the public sector is shrinking, privatization is being achieved through attrition.

Recent efforts have also varied considerably in terms of

the speed at which companies have been privatized. In

some cases, recent privatizations have been

sweeping—involving the transformation of state-owned

petroleum monopolies into completely privatized National governments have pursued various methods of

companies, almost overnight. However, more typical is privatization—the motivations for which are as various as

allowing relatively nondiscriminatory treatment of foreign

Governments have often undertaken a vast restructuring

of energy industries prior to the transfer of ownership to

the public. In Russia, for example, privatization has

involved the creation of eleven vertically integrated

petroleum companies, along with a large natural gasproducing company and a large transmission company.

In other countries, a restructuring has ensued largely after

the transfer of ownership from state to private hands. In

the United Kingdom, a merger and acquisition frenzy

ensued following the recent privatization of electricity

generation, transmission and distribution industries, as

well as in the natural gas transmission and distribution

industries.

It should be noted that the privatization of an industry

does not mean that governments relinquish their authority

to regulate these industries. In many cases, the politically

sensitive issue of what allowances could be made to

electric utilities being privatized in their freedom to adjust

residential electricity rates has placed constraints on the

privatization process.

Methods of Privatization
6 Energy Information Administration/ Privatization and the Globalization of Energy Markets 

The Organization of Economic Cooperation and Development (OECD) includes Australia, Austria, Belgium, Canada, Denmark, Finland, France, 10

Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the

United Kingdom, and the United States.

the methods themselves. The following are a number of privatization in the United States, most recently in natural

the more common means of achieving greater private gas transportation and electric power generation and

control over energy resources. transportation. Electric power generation, transmission,

Direct Sale of Entire Company to Public

In some instances, countries have chosen to transfer

ownership of industries or companies swiftly and completely. Argentina, the United Kingdom, Chile, and New

Zealand have generally undertaken some of the most ambitious of privatization efforts by auctioning off companies directly to the public—thereby letting the market The removal of a subsidy can also be viewed as a form of

determine the value of these companies through the bid- privatization. The removal of subsidies for European coal

ding process. In some cases, (for example, see the dis- operations, for example, precipitated the constriction of

cussion on the privatization of British Energy) the Europe’s coal mining industry and encouraged a large

auctioning off of a company has revealed an enormous di- shift in coal investment from European mines to mines in

vergence between newly-discovered market value and the the United States, Australia, and Latin America. 

previous book value of the company as recognized by the

government.

Partial Sale of Company to Public

Most privatizations have been gradual. For example, in

the case of British Petroleum, partial government ownership dates back to 1914. In 1977, the government reduced

its ownership share from 66 percent to 51 percent, to 46

percent in 1979, to 31 percent in 1983, to under 2 percent

in 1987, and to zero in 1995. Also, governments have often

sold shares of a state-owned firm while still retaining a

portion of the company (a “golden share”), thereby maintaining a limited degree of control over the company. This

practice has been widespread, both in OECD and nonOECD countries.10

Sale of a State-Owned Company to Another

Company or Consortiums

Often governments have chosen to sell state-owned

utilities directly to companies—either foreign or domestic.

 For example, when Bolivia privatized the state electricity

monopoly, Ende, it was broken into three electricity

generation companies and directly sold off to

foreign—primarily U.S.—utility companies.

Deregulation

Another form of privatization involves deregulation.

Deregulation has been the most prevalent form of energy

and distribution has long been held up as a model for the

“natural monopoly.” However, as the notion of a what

constitutes a natural monopoly has evolved, so has the

justification for maintaining government-controlled utilities.

Removal of Subsidies

Voucher Schemes

Another aspect of privatization concerns how public

ownership is achieved. In many formerly Communist

countries, voucher schemes have been adopted whereby

ownership of an industry is simply transferred to the

general public with no cash exchanged. A lack of

developed equity markets may have encouraged voucher

schemes. After the initial distribution of vouchers, individuals have been allowed to buy or sell these vouchers,

thereby encouraging the creation of stock exchanges. In

some instances, the transfer of ownership has been implemented with labor and management being allotted

favored shares.

Investment Vehicles

Privatization has opened enormous opportunities for

foreign investors. In overseas energy projects, companies

which in the past had generally avoided equity commitments have now begun to take financial stakes in projects.

Some of the world’s major construction companies and

electrical generation equipment companies have taken

equity stakes (in lieu of payment for services) in power

generation projects brought on by privatization, albeit

these stakes, have generally amounted to a small share of

the total capital commitment. Some commonly used

means of taking direct stakes in newly-privatized foreign

energy projects follow. 
Energy Information Administration/ Privatization and the Globalization of Energy Markets 7

Independent Power Producers 

Independent power producers are playing an important

and growing role in providing for the world’s future

power generation needs. Independent power producers

are generally producers of electricity that are separate

from franchised electric utilities. In several cases, U.S.

utilities have formed independent power-producing

subsidiaries as a vehicle of entry into non-utility electricity In several former Communist countries, along with a

generation investments, both in the United States and handful of Latin American countries, most foreign investoverseas. Other industries, such as oil companies and ment commitments have been restricted to a joint venture

natural gas transmission companies, have also set up with a domestic company. In some cases, such as in

independent power-producing subsidiaries. Among U.S. Russia, the government has also allowed foreign comcompanies, independent power producers have been panies to purchase a limited stake in domestic petroleum

among the most active in seeking overseas energy project companies.

investments.

Build, Operate, and Transfer Investments

One innovative financing method growing in popularity

involves the building of a power plant by a foreign 

investor, operating it for a prescribed period of time, and

then transferring it to the host company. This has been a

popular means of encouraging foreign investment in

power projects in underdeveloped and developing

nations.

Joint Ventures
Energy Information Administration/ Privatization and the Globalization of Energy Markets 9

One motive for privatizing only a small portion of a state-owned enterprise has to do with the concept of " price discovery." Allowing even a small 11

fraction of an enterprise’s shares to be publicly traded enables the market to signal an appraisal of the value of the entire enterprise. This would be one means

for the state to measure management performance.

Energy Information Administration, International Energy Review 1993, DOE/EIA-02219(93)(Washington DC, May 1995), p. 22. 12

“Plan to Mix Oil with Oil in Europe,” The New York Times (March 1, 1996), p. D3. 13

2. Profiles of Petroleum Privatizations 

in OECD Countries

One of the largest energy privatization developments in

terms of investment capital involves petroleum companies

located in the OECD countries. This group of companies

includes: British Petroleum, Elf Aquitaine (France),

TOTAL (France), ENI (Italy), Petro Canada, Repsol

(Spain), and Statoil (Norway).

These companies have been among the most active of the

world’s petroleum companies in responding to investment

opportunities occasioned by privatizations beyond their

home base political borders. Most of these petroleum

companies are vertically integrated and most have substantial foreign operations. Among these companies are

some of the world’s largest publicly-traded companies

and, in several cases, the largest industrial companies in

their respective home nations. They are also increasingly

owned by international investors, in particular, those

located in the United States. As with the U.S. major

petroleum companies, these companies are increasingly

operating in regions recently opened up due to privatization efforts, and they are becoming major operators in

regions such as Latin America, China, the Former Soviet

Union, and Southeast Asia. 

The histories of these companies vary considerably. In

recent years, some of these companies have been fully

privatized, some partly. In general, privatization of these

petroleum companies has occurred in the context of a

wide scale privatization of several state-owned industries.

However, some states have been reluctant to fully relinquish control and have continued to retain a 10-percent

controlling interest, a “golden share.” One of these com- 11

panies, Statoil of Norway, remains entirely-state owned.

These companies are in many ways the most direct

competitors of the major U.S. petroleum companies, in

part due to the close interconnection of the European and

North American petroleum industries. British Petroleum,

for instance, is the largest producer of crude oil in the

United States. British Petroleum is also the sixth largest

U.S. refiner and is among the top ten branded marketers

of gasoline in the United States. Other recently-privatized

European companies, such as TOTAL and Elf Aquitaine

of France, also have sizable U.S. petroleum investments.

Similarly, U.S. companies play a major role in European

industry. Roughly 90 percent of European crude oil

production comes from Norwegian and British territories

in the North Sea, and U.S.-based companies account for 12

roughly one-fourth of North Sea production. The

European presence of U.S. companies in downstream

petroleum is also very strong. Exxon and Mobil alone

account for one-fourth of Western European refining

capacity. Chevron, Dupont, and Texaco also have a major

presence in European downstream. Moreover, in 1996,

British Petroleum and Mobil agreed to combine their

European refining and marketing operations; the combined operation will control roughly 12 percent of the

European fuel market. Companies from the United 13

States also play a major role in European crude oil and

natural gas transmission and distribution as well as in

retail gasoline marketing.

The United Kingdom 

British Petroleum (BP) was founded as the Anglo-Persian

Oil Company in 1909. In its early years, BP’s primary

producing properties were located in Iraq, Abu Dhabi,

Kuwait and Qatar. Between 1914 and 1995, the British

government maintained an interest in British Petroleum,

and at times the government’s holdings exceeded fifty

percent. The privatization of BP began about 10 years ago

when the British government sold about 32 percent of the

company to the public. In 1995, the final 1.8 percent
10 Energy Information Administration/ Privatization and the Globalization of Energy Markets 

"BP agrees $3.5 billion deal to develop Algerian gas fields," Financial Times (December 18, 1995), p.1. 14

British Petroleum, Annual Report on Form 20-F 1994, p. 7. 15

British Petroleum, Annual Report on Form 20-F 1994, p. 7. 16

British Petroleum, BP Financial and Operating Information 1991-1995, p. 18. 17

"A Very Refined Dilemma," The Financial Times (January 12, 1996), p. 19. 18

"BP to Slim German Gas Stations," The Wall Street Journal (February 16, 1996), p. A6. 19

British Petroleum, BP Financial and Operating Information 1991-1995, p. 19. 20

Elf Aquitaine, 1995 Annual Report, pp.3 and 37. 21

government share in BP was sold to the public, making BP based in the United States—the largest capital market in

a fully-privatized company. British Petroleum is the the world. British Petroleum is currently 17 percent held

twelfth largest producer of crude oil in the world. BP is by U.S. investors, up from 6 percent ownership as recently

also Britain’s largest industrial company. BP’s as 1991. U.S.-based investors are now the largest owners

downstream operations are also sizable. BP is the world’s of BP’s shares, after investors from the United Kingdom,

fifth largest refiner, with BP’s downstream operations who have a 70-percent share.

largely based in Europe and the United States.

Recent energy privatizations in several global regions has

resulted in a substantial number of new investment

opportunities for BP. In recent years, BP has continued to

expand its retail networks in Eastern Europe and it has

added nearly 100 service stations in eastern Germany, the

Czech Republic, and Hungary. In recent years, BP has

targeted new frontier petroleum areas for investment. The

company has reached a $3.5-billion agreement with

Sonatrach to develop gas fields in Algeria. BP is also a 14

major player in Colombia and Vietnam, and is pursuing

exploration opportunities in Venezuela and Azerbaijan.15

Since 1990, BP and Statoil, the Norwegian state oil

company, have been working in close commercial

cooperation in a number of areas. A program of joint

research is underway, and the two companies are also

undertaking joint exploration and development work in

Azerbaijan, Kazakhstan, Vietnam, Angola, and Nigeria.16

In contrast to its decided move into several frontier areas,

and as a result of having undergone a substantial restructuring of operations in recent years, BP has generally

reduced its level of investment in the company’s historic

markets. This restructuring has been most evident in

downstream petroleum. Since 1991, BP has reduced its

employment level in refining and marketing operations

by 32 percent versus a 23-percent reduction in upstream

employment. BP has sold three of its U.S. refineries in 17

recent years and has sold marketing operations in

California and Florida. In 1995, BP announced plans to

shut down or sell three refineries in the U.S. and Europe,

cutting capacity by nearly a third. In 1994, BP sold its 18

Spanish retail network (excluding motorway sites) to

Repsol and, in 1996, announced that it would close 250, or

17 percent of its retail gasoline outlets in Germany. 19

One result of privatization has been the company’s

increased attraction to foreign investors, particularly those

20

France

Elf Aquitaine (Elf) was created in 1941 at the initiative of

the French government, largely to exploit the Lacq oil and

gas field in southwestern France. Elf is France’s largest

petroleum company. The French government initiated a

privatization scheme in 1986 with the sale of 14 percent of

Elf to the public. By 1995, the French government’s share

was reduced to 10 percent. Elf is predominantly an oiland gas-producing company, and most of its production

comes from former French colonies among the African

countries surrounding the Bay of Guinea. Elf has refining

operations in Europe and West Africa. Elf is the seventh

largest refiner of crude oil in Europe and seventh largest

producer of North Sea crude.

As with BP, global energy privatization has also had a

substantial impact on Elf’s activities. In upstream, Elf is

carrying on operations in such frontier areas as China,

Latin America, the Former Soviet Union, Eastern Europe,

and Vietnam. Downstream, Elf purchased a refinery in

eastern Germany. Elf has also invested in a joint venture

(with Russia’s recently privatized Lukoil) to expand and

upgrade a refinery in eastern Germany. Elf had plans to

build a $2.5-billion dollar refinery in China but later

pulled out.

Like British Petroleum, Elf has also engaged in a recent

restructuring. Since 1993, Elf has shed roughly 10 percent

of its assets and has reduced employment from 94,300 in

1993 to 85,500 in 1995. Also as with British Petroleum, 21

foreign investors have increased their ownership of Elf in

recent years. Foreign investors held 35 percent of Elf’s

shares in 1995 versus 21 percent in 1992.

TOTAL is France’s second largest petroleum company.

TOTAL was founded in 1924 at the initiative of the French
Energy Information Administration/ Privatization and the Globalization of Energy Markets 11

TOTAL, 1995 Fact Book, p. 21. 22

TOTAL, 1995 Fact Book, p. 34. 23

"ENI Pays First Dividend for 23 years,” Financial Times" (May 11, 1995), p. 27. 24

Petro-Canada, 1994 and 1995 Annual Report, p.44 and p. 48, respectively. 25

Petro-Canada 1995 Annual Report, p. 27. 26

government. Initially, TOTAL consisted largely of Middle States. ENI’s China production began in 1992, although it

East petroleum production interests. The French govern- currently amounts to only 1 percent of ENI’s total crude

ment’s ownership of TOTAL peake the world. British oil production. Downstream, ENI has recently obtained a

Petroleum is currently 17 percent held at 34 percent but 17-percent interest of a consortium (including Conoco,

was reduced to 5 percent in 1992. The current French and Royal Dutch/Shell) to reconstruct two Chinese refingovernment’s five percent interest, coupled with the eries for a total investment of $480 million. ENI has also

ownership interests of several large French institutional signed an agreement with Russia’s Lukoil to jointly

investors who have long held a substantial stake in the develop an oil field in western Siberia. ENI has recently

company, would generally indicate a fairly undiluted and attempted to diversify its ownership overseas. As an

stable ownership structure. However, foreign interests example, a large portion of ENI’s recent public offerings

(particularly from the United States and the United were dedicated to U.S. investors. ENI has also greatly

Kingdom), have increased their ownership from 23 reduced its payroll in recent years from 124,000 in 1993 to

percent in 1990 to 44 percent in 1994. 91,000 in 1995. 22

TOTAL is the world’s 23rd largest petroleum producer

and 17th largest refiner. The Middle East (particularly the

U.A.E.) accounts for 55 percent of TOTAL’s crude oil and

natural gas production. Other large producing regions include the North Sea and Indonesia. TOTAL is also active

in several frontier areas of petroleum activity. The company currently produces oil and gas in Algeria, Libya, Argentina, and it has a 15-percent interest in Colombia’s

Cuisiana field. TOTAL also has upstream operations in 23

Myanmar, Vietnam, Yemen, Nigeria, and Cambodia

and has a production-sharing contract with Russia. Downstream, TOTAL is building a refinery in China and studying the construction of one in Vietnam. TOTAL has also

opened service stations in Hungary and the Czech

Republic. 

In contrast to many of the other recently privatized companies, TOTAL’s asset base has grown in recent years, by

9 percent since 1992, while employment has increased

from 51,139 to 53,536 workers.

Italy

Italy’s ENI was nationalized by Mussolini in the 1930's

and is currently Italy’s largest industrial company. ENI’s

privatization has only been very recent. The first 14.7

percent of ENI was sold to the public in 1995 for $4.1

billion. ENI has a refining capacity of 933,000 barrels per

day and is Europe’s third largest refiner. ENI’s crude oil

production comes primarily from Libya, Egypt, Nigeria,

the Congo, the North Sea, and Angola. ENI produces

smaller amounts of crude oil in Tunisia and in the United

24

Canada

In the wake of the 1974 world oil crisis, the Canadian government took measures deemed to strengthen the

security of Canada’ s energy needs. Petro-Canada was

started in 1975 as an instrument of Canada’s National

Energy Policy, which was designed to encourage domestic

ownership of Canadian petroleum resources. According

to the plan, Petro-Canada was to provide Canadian policy

makers with a better control and understanding of energy

developments, or in the parlance of the time to act as a

“window” on the world’s energy industry. For several

years, Petro-Canada enjoyed a privileged position in

Canadian energy, being heavily subsidized by the federal

government and having exclusive exploration rights to

certain Canadian properties. Shortly after its creation,

Petro-Canada embarked on an aggressive expansion, acquiring many of the Canadian assets of foreign companies.

After a change in government in 1984, Canada started

privatizing Petro-Canada, which had by that time become

widely regarded as inefficient, oversized, and laden with

debt. After privatization, Petro-Canada began a

significant restructuring involving large reductions in

operating costs and employment. Since 1990, PetroCanada has reduced its assets by roughly 10 percent,

while employment has fallen from 9,806 workers in 1990

to 5,646 in 1995. In 1995, the government’s share in 25

Petro-Canada was reduced to 20 percent, which may be

sold off in the future. Also, in 1995 Petro-Canada shares

were listed on the New York Stock Exchange.26
12 Energy Information Administration/ Privatization and the Globalization of Energy Markets 

"Petro-Canada Emerging as a Model of State Oil Company Privatization,” The Oil and Gas Journal (December 25, 1995), p.22. 27

"The Americas: Repsol Group Wins Auction for Refinery," Financial Times (June 12, 1996), p. 31. 28

"YPF S.A. Announces Successful Bid for Peru’s LaPompilla Refinery," PR Newswire (June 12, 1996). 29

"Full Privatization of Repsol A Reality,” Platt’s Pilgram News (May 15, 1996), p.2. 30

Statoil, Annual Reports and Accounts 1995, pp. 23 and 24. 31

Petro-Canada is the world’s 41st largest producer of crude An example of where privatization efforts on two separate

oil. Petro-Canada is Canada’s second largest refiner and continents have converged is Repsol. In 1996, in its larhas a 17-percent share of Canada’s refined product gest foray abroad, the company purchased a 38-percent

market. Petro-Canada is almost exclusively a domestic stake in the Argentine company Astra for $360 million.

company, with its natural gas production coming Astra is Argentina’s fifth largest energy company and is

primarily from western regions and its liquids production fully vertically integrated with petroleum exploration,

being largely produced in the east. Petro-Canada has 25- production, transportation, and refining operations.

percent interest in the $12-billion Hibernia field project, Repsol has also recently purchased refining assets in

along with with Mobil (33 percent), Chevron (27 percent), Peru. Repsol also has recently attempted to encourage

Murphy Oil (6 percent), and the Canadian government. greater foreign ownership. In its most recent sell-off of

While operating primarily in Canada, in 1996, PetroCanada also started producing oil in Algeria. PetroCanada holds a 70-percent interest in a 1994 discovery of

40-45 million barrels of oil in a field located north of

Algiers.27

Spain

Spain’s Repsol was founded in 1987, when the Spanish

government consolidated various domestic upstream and

downstream holdings into a single company. The government sold a 24-percent stake in the company in 1987. The

government sold off additional shares in later years,

reducing the state’s stake to 10 percent in 1996.

Repsol is primarily a downstream company and is

Europe’s sixth largest refiner. Repsol operates 3,308 exploration and production operations in Dubai, Egypt, and

Indonesia. Sixty-one percent of Repsol’s production comes

from the Near and Middle East, 12 percent from the Far

East, and 9 percent from Latin America.

28

29

shares, a portion of the shares were reserved for U.S.

investors.30

Norway

Norway’s Statoil is the one major OECD-based European

petroleum company to remain entirely state-owned.

Statoil’s genesis is closely tied to the exploitation of North

Sea petroleum; it was founded shortly after the discovery

of crude oil and natural gas in the North Sea. In recent

years, however, Statoil’s focus has shifted beyond the

North Sea. As a result of recent privatizations, Statoil is

currently pursuing exploration and development efforts

in China, Azerbaijan, Kazakhstan, Namibia, Nigeria, and

Vietnam. Statoil has recently expanded its retail gasoline 31

efforts into such new markets as Estonia, Latvia,

Lithuania, Poland, and eastern Germany. Statoil has also

taken a 15-percent stake in a refinery in Malaysia, with the

Malaysian state oil company, Petronas, as its partner.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 13

World Bank, World Debt Tables 1996, pp. 204-205. 32

U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business (Washington DC, August 1990-August 1995). Note: The 33

FDI in Latin American calculation excludes Panama, as Panama is frequently used as an offshore depository of funds reinvested in other countries.

One of the most notable exceptions is Maxus, formerly an independent U.S. oil company, which was purchased during 1994 by YPF. 34

 3. Latin American Petroleum Privatization

Privatization in the Latin American petroleum industry need of raising revenues through privatization to fund

has occurred in an atmosphere of radical economic other spending priorities. Perhaps more important erratic

transformation. In the early 1990's, Latin American tax regimes also served to discourage foreign investment

countries, almost en masse, embarked on a series of free in Latin American exploration and production operations.

market-based economic reforms. These policy reforms

have in many cases been universal, covering virtually the By 1990, largely due to privatization and other economic

entire range of economic activities—fiscal, monetary, liberalization measures, Latin American nations had

commercial, trade, and industrial. Central to Latin restored international investor confidence sufficiently that

American economic reforms has been the privatization of net capital flows into the region increased nearly 250

a range of formerly state-owned industries, from phone percent from 1989, growing from $8.9 billion in 1989 to

companies to electric utilities to petroleum companies. $21.5 billion in 1990. Between 1989 and 1994, U.S.

Legal reform has also been key to privatization efforts in foreign direct investment in Latin America nearly

the region, particularly with regards to treating foreign doubled. Privatization of state-owned industry appears

companies equally with domestic companies under the to have played a major role in reversing Latin American

law. capital flight. Approximately 130 Latin American and

For several reasons Latin American countries were ventures in Latin America.

persuaded to privatize national petroleum companies. In

addition to obtaining badly needed investment capital That is not to say that political risk has disappeared from

and increasing state revenues, privatization is also a Latin America, or that the possibility of future privatimeans of introducing free market economic reforms. zation reversals are an unlikelihood. Even though the

Much of the Latin American petroleum sector had become Peruvian government has achieved some noteworthy

characterized by bloated payrolls, outdated technology, success in suppressing its Marxist guerrila insurgency,

under investment, and poor provision of services. Further, Shining Path has yet to disappear. The recent uprising in

Latin American state petroleum companies are among the Chiapas, Mexico and Colobia’s long-standing war with its

largest petroleum companies in the world (Table 1). As insuragency movement underscore some of Latin

such, their privatization presents a singular opportunity America’s enduring political problems. 

for Latin American governments to raise enormous sums

of revenue. The U.S. major oil companies have increased their

Developments surrounding the numerous 1980's debt America, nearly doubling their expenditure level between

crises also had much to do with recent Latin American 1987 and 1994. With some exception, most Latin American

efforts to privatize their petroleum industries. In exploration and development activity involving U.S.

particular, these crises greatly hindered the ability of Latin companies historically has been, and still is, conducted by

America's state petroleum companies to attract much the majors. Although amounting to only 6 percent of

needed outside capital without providing investors with their total foreign exploration and development spending

added incentives and reduced risks. Similarly, the debt in 1994, Latin American exploration and development

crises left many Latin American governments not only in spending by the U.S. majors has grown at twice the rate of

32

33

non-Latin American companies currently have petroleum

exploration and development expenditures in Latin

34
14 Energy Information Administration/Privatization and the Globalization of Energy Markets

Energy Information Administration, Form EIA-28, Financial Reporting System. 35

"International Rig Count,” Oil and Gas Journal (January 15, 1996), p. 62. 36

"Foreign and Private Investment Needed," World Oil, Vol. 216, No. 8 (August 1995), p. 45ff. 37

"International Rig Count,” Oil and Gas Journal, 93 (February 20, 1995). 38

U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business (Washington, DC, various issues August 1990-August 39

1995).

Table 1. Worldwide Company Rankings for the Largest Latin American Petroleum Companies, 1994*

Company (Country) World Petroleum Production Ranking World Refining Capacity Ranking

YPF (Argentina) . . . . . . . . . . . . . . . . . . . 37 50

Petrobras (Brazil) . . . . . . . . . . . . . . . . . . 21 8

Ecopetrol (Colombia) . . . . . . . . . . . . . . . 40 57

Petroecuador (Ecuador) . . . . . . . . . . . . 48 58

Pemex (Mexico) . . . . . . . . . . . . . . . . . . . 3 10

PDVSA (Venezuela) ............... 5 4

Petroecuador’s world rankings are based on 1993, not 1994, information. *

Sources: Ecuador: Petroleum Intelligence Weekly (December 12, 1994); all others: Petroleum Intelligence Weekly (December 18, 1995).

their exploration and development expenditures in other responsible for reversing years of declining oil production

foreign locales. in Argentina. In terms of crude oil production, YPF is 35

However, interest in Latin America has not been limited

to U.S. companies. Latin America’s indigenous petroleum

companies, foreign multinational oil companies, and some

U.S. independents have shown greater interest in developing the continent’s petroleum resources. One evidence

of the increased level of exploration and development

activity in Latin America is the petroleum drilling rig

count. The number of drilling rigs operated in Latin

America are continuing to increase, as they have yearly

since December 1992, reaching 271 in December 1995.36

The following sections highlight some of the more

important recent foreign company activity due to Latin

American petroleum privatization, on a country-bycountry basis, beginning with Argentina, which has

undergone the most substantial recent petroleum privatization of any Latin American country.

Argentina

Argentina embarked on a series of petroleum privatization efforts which began in 1985 and continued through

1993, when the final step in privatization was achieved

with the sale of Yacimientos Petroliferos Fiscales (YPF),

the state oil company of Argentina. Since the liberalizing

of rules governing foreign participation in Argentine oil

and gas, the benefits realized from new sources of investment and technology have been substantial and have been

relatively small when compared to such giant Latin

American petroleum companies as Mexico’s Pemex and

Venezuela’s Petroleos de Venezuela SA (PDVSA). During

1994, YPF ranked 37th and 50th respectively, in terms of

the world's crude oil producing companies and refining

companies.

However, despite its size, the privatization of YPF represents one of the most significant and successful of all Latin

American state-oil company privatizations. In 1990,

Argentine crude oil production stood at 483,000 barrelsper-day, a level less than that produced a decade earlier.

However, by 1995, Argentine production reached more

than 700,000 barrels per day, and 1 million barrels of

crude are expected to be produced daily in the year 2000.37

During 1994, when drilling activity was largely deteriorating in all other regions, the opposite was true in

Argentina, which experienced a 66-percent increase in its

crude oil and natural gas rig count between 1993 and

1994.38

An influx of private investment largely accounts for the

turnaround in Argentine petroleum. For instance, U.S.

direct investment in Argentina's petroleum industry has

climbed from $452 million in 1989 to $773 million in

1994. 39

Foreign companies were involved in Argentina's petroleum industry for several years prior to privatization. In

1994, the Argentine subsidiaries of the U.S. companies 
Energy Information Administration/Privatization and the Globalization of Energy Markets 15

"Privatization of State Company Catalyzes Argentine Oil Industry," Oil and Gas Journal, 93 (February 13, 1995), p. 46. 40

Petroleum Intelligence Weekly (December 14, 1992). 41

"Privatization of State Company Catalyzes Argentine Oil Industry," Oil and Gas Journal, 93 (February 13, 1995), p. 52. 42

Durgin, Hillary, "Pride agrees to buy Argentina driller," The Houston Chronicle (March 19, 1996), p. 3. 43

Bowen, Sally, "Companies and Finance: The Americas: Repsol group wins auction for refinery," Financial Times (June 12, 1996), p. 31. 44

Goldman, Joe and Peter Zipf, “Mobil Circling Around a Stake in Astra," Platts Oilgram News (May 24, 1996), p. 1. 45

"Bolivia Signs New Trade and Cooperation Accords with Chile and Argentina," Chronicle of Latin American Economic Affairs (October 20, 1994). 46

"Privatizations Open Exploration and Production Opportunities," World Oil (August 1994). 47

YPF, 1994 Annual Report, p. 3. 48

YPF, 1994 Annual Report, p. 2. 49

"Mexico opens northern cities for natural gas distribution," Energy Report, 24 (May 27, 1996) and Kummer, Kristie, “U.S.-Mexico natural gas issues," 50

Gas Energy Review, 24 (April 1996), p. 6.

The Economist (August 21, 1993). These sales raised over $20 billion. 51

Petroleum Intelligence Weekly (June 10, 1991). 52

Amoco and Occidental accounted for 7 percent and 3 per- project. YPF also entered into a partnership in

cent, respectively, of Argentina's crude oil production. the early 1990s with Brazil’s state oil company, 40

Exxon and Royal Dutch/Shell (Shell Oil Company's Petrobras, to develop gas reserves for possible

Netherlands/UK parent) also have owned major export to Brazil. YPF recently engaged in

Argentine refineries for several years. exploration projects in Chile, Peru, and offshore

Privatization is responsible for more recent foreign

ventures. In 1993, YPF announced that it would  YPF recently expanded their marketing operamodernize its flagship La Plata refinery with technical tions in Bolivia, Chile, and Peru.

assistance from Chevron. In 1992, the U.S. company Enron

led a joint venture that won the concession to own and

operate one of the two Argentine national gas

transmission systems divested by Argentina when the

state gas company, Gas del Estado, was privatized.41,42

Drilling companies from the United States entered

Argentina with Pride Petroleum Services’ 1996 purchase

of Argentina’s largest drilling and workover rig company,

Quitral-Co. S.A.I.C., for approximately $140 million. In 43

1996, the former Spanish state oil company, Repsol,

purchased a 38-percent controlling interest in Argentina’s

fifth-largest energy company and fourth-largest crude oil

producer, Astra.44,45

In addition to encouraging foreign direct investment,

privatization also may be responsible for a more

outward-looking Argentine oil industry. YPF entered the

ranks of major multinational oil companies with its

acquisition of Maxus Petroleum in 1994. Maxus, a U.S.

independent crude oil exploration and production company, has operations in Asia and the United States, in

addition to Bolivia, Colombia, Ecuador, and Venezuela.

Other recent actions by YPF also indicate an attempt to

broaden its operations overseas:

 In 1994, YPF signed a contract with YPFB, the

Bolivian state oil company, to explore for

hydrocarbons near the Bolivian-Argentine

border. YPF expects to invest $50 million in the

46

47

Louisiana.48

49

Mexico

In contrast to Argentina, efforts at privatization of the

Mexican petroleum industry and the opening of new

business opportunities to foreign companies have been

negligible. Electric power and natural gas distribution

projects appear to provide the greatest opportunity for

foreign investment. Mexico's recent privatization of large 50

nonenergy public firms along with the signing of the

North American Free Trade Agreement created some

initial optimism among foreign companies that petroleum

privatization would ensue. In 1991, Chevron expanded 51

its small representative office in Mexico City in the hope

of signing a service deal to gain access to Mexican oil.

Similarly, Amoco, Mobil, and Texaco showed an interest

in Mexican investment. Both Occidental and Royal 52

Dutch/Shell’s U.S. affiliate, Shell Oil, recently made

equity investments in petrochemical operations formerly

belonging to Pemex, the Mexican state petroleum

company and the world's third-largest producer of crude

oil and the tenth-largest refiner in terms of crude oil

refining capacity.

However, despite some initial efforts, reform in Mexican

petroleum has faltered. Foreign participation in the

exploitation of Mexico’s petroleum resources has long

been a particularly sensitive matter in Mexican politics.
16 Energy Information Administration/Privatization and the Globalization of Energy Markets

Yergin, Daniel, The Prize (New York: Simon Schuster, 1991), pp. 229-233. 53

Yergin, Daniel, The Prize (New York: Simon Schuster, 1991), pp. 271-279. 54

"New President Pledges Economic Liberalization," Petroleum Economist, Vol. 61, No. 11 (November 1994), p. 17. 55

Yergin, Daniel, The Prize (New York: Simon Schuster, 1991), pp. 648-650. 56

Huber, Ed, "Opportunities in the Americas: Pipeline projects open Latin markets," Oil and Gas Investor, 16 (February 1996), p. 2. 57

"Venezuela Seen as Next Boom Town for Project Finance Deals," Bank Letter, 20 (January 22, 1996), p. 2. 58

Marquez, Humberto, "Venezuela: Debate on Oil Privatization Goes On, and On ...," Inter Press Service (May 7, 1996) and Katsouris, Christina, 59

"PDVSA chief mulls sale of minority stake in firm as country reforms petroleum sector," The Oil Daily, 46 (April 24, 1996), p. 1.

Chatterjee, Pratap, "Oil and Gas Industry Gears Up for Latin America Bonanza," Inter Press Service (March 5, 1996). 60

"German-U.S.-Japanese team wins oil exploration license in Caracas," Deutsche Presse-Agentur (January 22, 1996). 61

See, for example, Yergin, Daniel, The Prize (New York: Simon Schuster, 1991), pp. 648-650. 62

"Conoco-Maraven combine to tap Orinoco crude," Oil and Gas Journal, 93 (November 20, 1995), p. 41. 63

Although, substantial early development of the Mexican and the fourth-largest refiner. Heavy oil investment

petroleum industry was accomplished by British and U.S. carries tax concessions, as do enhanced-oil-recovery

petroleum companies, nationalization of all foreign projects, which lower the statutory tax rate to 34 percent 53

petroleum assets on March 18, 1938 abruptly ended from 70 percent. Further, on January 7, 1996, Venezuela’s

foreign activity in Mexican Petroleum. Foreign congress passed a law allowing larger new projects with 54

participation in oil and gas exploration, production, and substantial exports and foreign investment to retain export

refining is still proscribed by the Mexican constitution, earnings abroad. Although privatization of PDVSA does

which allows only Pemex to engage in these activities. So not seem likely, company president Luis Giusti recently

far, the only substantive reform measures include a noted that, “it would be very healthy to have 15 percent

restructuring of Pemex's operations (along with substan- [of shares] in the capital market.” Venezuela also

tial reductions in employment), an attempt to sell several auctioned exploration rights to eight tracts but received no

chemical units and other non-core operations, and an bids for two other tracts. 

increased reliance on foreign drilling contractors. Pemex

also has undertaken joint ventures abroad. Pemex's The most notable result of Venezuela’s opening its

downstream operations have focused on reconfiguring petroleum industry is its awarding of the first exploration

and modernizing its refineries to both increase product license to foreigners since its nationalization twenty years

output and address environmental concerns. Despite ago. The initial license was awarded to a consortium of 

refinery upgrades, Pemex's refinery capacity is less than Veba (Germany), Mobil, and Nippon Oil (Japan),

current product consumption, leading to increased which outbid 11 others, including the second-place

product imports and further refinery construction. Pemex consortium of Exxon and Royal Dutch/Shell, for a western

also replaced some of its domestic shortfall by gaining a onshore oil field. Other significant projects opened to

50-percent share in Shell Oil's Deer Park, Texas, refinery. foreign companies include the $5.6-billion Cristobal Colon 55

Venezuela

Venezuela is the most recent Latin American country to

have nationalized its petroleum industry a point wellknown by several of the world’s leading petroleum

companies. Several of these companies thought they were

undercompensated for their petroleum assets absorbed

during 1975 by Venezuela’s nationalization process.56

Although Venezuela's liberalization of its petroleum

industry is more substantial than Mexico's, it still falls

short of Argentina’s complete privatization. Venezuela

approved a new profit-sharing concessionery program in

July 1995 under which private domestic and foreign

companies may bid for joint ventures with Petroleos de

Venzuela (PDVSA). PDVSA is Venezuela’s state oil company and the world's fifth-largest producer of crude oil

57

58

59

60

61

LNG export project of a consortium including Exxon and

Lagoven, a PDVSA affiliate. This venture is the first

foreign ownership of Venezuelan hydrocarbon reserves

since the 1975 oil law that nationalized the petroleum

industry and created PDVSA was passed. However, the 62

venture was suspended, awaiting higher natural gas

prices. Another project is a joint venture between Conoco

(United States) and Maraven (a PDVSA affiliate) to

produce heavy oil, which will then be upgraded and

refined into products at Conoco's U.S. refineries.63

Other foreign companies are either discussing joint

ventures, or have formed joint ventures and are awaiting

congressional approval to proceed, including:

 ARCO and Corpoven, a PDVSA affiliate, are

discussing a heavy oil production and upgrading project.
Energy Information Administration/Privatization and the Globalization of Energy Markets 17

Mann, Joseph, "Mobil returns to Venezuela," Financial Times (April 4, 1995), p. 27. 64

National Petroleum News Market Facts '95 (mid-June 1995), p. 35. 65

Energy Information Administration, Petroleum Supply Annual 1993, DOE/EIA-0340(93) (Washington, DC, June 1994), pp. 110-114. 66

"Energy in Latin America; Even Oil is Growing Less Sacred," The Economist (June 1, 1996), p. 63. 67

Music, Kimberley, "Brazilian energy minister offers plan for regulation of newly opened sector," The Oil Daily, 45 (December 21, 1995), p. 1. 68

Platts Oilgram News (August 13, 1993). 69

The Oil Daily (December 21, 1995), p. 1. 70

 Chevron agreed to do a feasibility study of a

base lubricant manufacturing plant joint ven

ture with Citgo, PDVSA's U.S. affiliate, and

Maraven.

 Conoco is a member of a consortium awaiting

congressional approval of a joint venture with

the PDVSA affiliate Bitor to produce and market

the boiler fuel orimulsion.

 Enron is studying the feasibility of a joint venture with Maraven to produce petrochemicals.

 Mobil is studying the feasibility of two different

heavy crude upgrading joint ventures, one with

Maraven and the other with Lagoven.

Foreign companies also are undertaking ventures governed by service contracts with PDVSA and equity

ventures that do not require congressional approval.

Chevron and Maraven have created a heavy crude production joint venture with an operating contract, while

Mobil is a member of a consortium to evaluate exploration

and development opportunities in the new areas opened

for exploration by Venezuela during 1995. Mobil bought

50 percent of Nacional de Grasas which operates the

largest lubricants blending plant in Caracas and is the

largest lubricants company in Venezuela. Canadian 64

Occidental has formed a joint venture to bid on

exploration and development contracts PDVSA is expected to offer during 1995. Occidental signed a 20-year

agreement with Maraven to increase oil production. 

Although Venezuela’s privatization efforts have lagged

those of other Latin American countries, PDVSA has long

been an internationally oriented petroleum company. For

instance, PDVSA's U.S. subsidiary, Citgo, is the largest 

retail marketer of gasoline in the United States. In terms 65

of U.S. refining capacity, PDVSA ranks third among

foreign-owned companies behind Royal Dutch/Shell and

British Petroleum. PDVSA also owns substantial refining 66

operations in Europe and the Caribbean.

Brazil

During 1994, Brazil's national government began considering possible privatization plans in order to generate

badly needed investment capital. Revision of the constitutional prohibition of foreign involvement in upstream oil

and gas to allow foreign joint ventures with Petrobras,

Brazil’s state oil company and the world’s 21st-largest

company in terms of oil production and the eighth-largest

refiner, also is being considered. However, full privatization of Petrobras, which is chiefly owned by the federal

and state governments of Brazil as well as by private

enterprises and individuals through local stock market

shares, has been categorically rejected. Nonetheless, 67

some erosion of Petrobras’ monopoly may be achieved by

a proposal to the Brazilian congress that would compel

Petrobras to compete with private companies for new

exploration areas, leaving Petrobras with 3-year concessions to all known exploration areas and to any new

discoveries by Petrobras.68

Little foreign activity has ever occurred in Brazilian

upstream petroleum. The only foreign commercial

discovery occurred during the 1970's and was made by

the Shell Oil affiliate Pecten. The discovery was an

offshore natural gas field. Petrobras’ substantial reserves

and refining capacity are a tempting target for potential

buyers, but, until further efforts at privatization are made,

few opportunities exist for foreign companies in Brazil. 

The most significant project currently underway in Brazil

by a non-Latin American company is Tenneco Gas’s construction of the Brazilian part of the Bolivia-Brazil pipeline

and some other natural gas projects. PDVSA and 69

Petrobras also are negotiating a refinery joint venture.70

Colombia

Legal reforms to allow privatization of Colombian energy

resources are underway. Colombia’s government, noting
18 Energy Information Administration/Privatization and the Globalization of Energy Markets

World Oil (August 1994). 71

A remittance tax is a withholding tax assessed on proceeds earned by a company’s activities in some foreign country. The expectation is that the 72

proceeds will be repatriated. Often the remittance tax may be avoided by reinvesting the proceeds in the host country. In the case of Colombia, if the

reinvestment is maintained for at least ten years, then the tax is forgiven entirely. See Neira-Mejia, Luis Carlos and Ricardo Munoz-Mejia, “Colombia,”

International Financial law Review (October 1994), pp. 16-20.

Oil and Gas Journal (November 20, 1995), p. 30. 73

Reuters Financial Energy News (September 6, 1994). 74

"Getting in Step; Latin American Governments Turn to Private Sector for Infrastructure Needs," Latin Finance, Vo. 58 (June 1994), p. 58ff. 75

"Ecuador Investment: FDI Falls 11.5% to $470m in 1995," EIU Views Wire (January 23, 1996). 76

the importance of oil exports, is taking steps to improve  Enron and Ecopetrol have a joint venture to

the attractiveness of oil and gas exploration and develop- develop a 200-megawatt oil-fired electricity

ment to foreign investors. The first step was the elimina- generating plant. Enron also leads a consortium

tion of a hydrocarbon production tax. Previously, that will build, own, and operate a 200-

Colombia had one of the highest rates of petroleum taxa- megawatt cogeneration plant in Cali.

tion in the world. Recent changes in its tax laws have 71

reduced both some loopholes and some fees on investment in the hope of enticing more foreign investment the

oil and gas remittance tax may be reduced to 7 percent, 72

which is the rate charged other Colombian industries.73

The most significant energy privatization contemplated is

the sale of the state's 50-percent share of the Carrejon coal

mine. However, reports of privatization of some or all of

the state oil company Ecopetrol, the 40th-largest producer

of petroleum and 57th-largest refiner in the world, have

been denied by the country's energy minister. 74

Recent privatization efforts created numerous new foreign

investment opportunities in Colombia. British Petroleum

discovered 2 billion barrels of proved reserves in the

Cusiana and Cupiagua oil fields, which will be developed

by a joint venture with Triton Energy (United States),

Total (France), and Ecopetrol. This joint venture also will

spend $2 billion upgrading Colombia's pipelines to

transport the additional production. Another joint venture, which includes Ecopetrol, British Petroleum, Total,

Triton Energy, and others, will build an oil export pipeline

from the Cusiana Field. British Petroleum also purchased

Maxus' 53-percent share of a block adjacent to the Cusiana

Field, augmenting the 10-percent share it already held.

Recent foreign company activity in Colombia's petroleum

industry include the following: 

 Amoco's Colombian subsidiary has obtained a

60 percent interest in a 45-million cubic feet

natural gas field and plans to drill a second well

in this field during 1995. Chevron and Exxon

also have ongoing petroleum exploration and

development operations. 

 Exxon has a 50-percent share in the soon-tobe-privatized Carrejon coal mine.

 Conversely, Texaco reduced its Colombian

heavy oil production by selling five heavy oil

fields during 1994. Texaco plans to expand its

natural gas operations in Colombia through the

addition of a second offshore platform during

1996 and plans to engage in new exploration in

the Middle Magdalena Valley.

Ecuador

Ecuador is following the more typical course of Latin

American countries by privatizing most state-owned

nonenergy assets and selected energy assets. The state oil

company Petroecuador, which was the 48th-largest

producer of petroleum and the 58th-largest refiner in the

world during 1993, and other strategic sectors will be

privatized through awarding concession contracts instead

of direct sale or the sale of equity shares.75

During 1995, five production-sharing contracts were

signed following the seventh round of contract solicitations. Among the companies awarded contracts were the

U.S. companies Oryx and Triton and the Kuwaiti Sante Fe

Minerals and Energy. Amoco and Mobil have a joint 76

venture to operate a 25-year concession in a production

block in the Amazon Basin. Oryx has taken over the

operation of an oilfield joint venture with Ecopetrol,

which currently produces 8,000 barrels per day. Oryx also

leads a consortium that won a 25-year production-sharing

concession for an oil field block.
Energy Information Administration/Privatization and the Globalization of Energy Markets 19

"Peru’s La Pampilla Refinery Sold for $180.5 million," Reuters (June 11, 1996). 77

Bowen, Sally, "Companies and Finance: The Americas: Repsol group wins auction for refinery," Financial Times (June 12, 1996), p. 31. 78

Katsouris, Christina, "ARCO signs E&P contract with Perupetro as firm recovers from tender offer flop," The Oil Daily, 45 (December 11, 1995), p. 79

1.

"Group Led by Elf Signs Peru Oil, Gas Deal," Reuters (September 8, 1995). 80

Oil and Gas Journal, 93 (January 16, 1995). 81

"YPF S.A. Announces Successful Bid for Peru’s La Pampilla Refinery,” PR Newswire (June 12, 1996). 82

Bowen, Sally, “News: The Americas: Sell-off initiative heading for trouble,” Financial Times (April 16, 1996), p. 3. 83

Financial Times (April 16, 1996), p. 3. 84

Kielmas, Maria, "Latin America restructures," Petroleum Economist, 62 (September 1995), p. 40. 85

Kielmas, Maria, "Latin America restructures," Petroleum Economist, 62 (September 1995), p. 41. 86

Chevron Corporation, Press Release (June 28, 1995). 87

Peru

New oil legislation was passed in August 1993, leading to

a return of foreign investment and the eventual privatization of the state oil company, Petroperu. Perupetro, a

state agency and not to be confused with Petroperu, was

established to promote, negotiate, and administer exploration and production contracts, for which Petroperu must

compete with private firms. Recently, Peru's government

improved the country's legal framework, improved its

national economy, and reduced terrorism, all of which

activities were welcomed by foreign investors. The

privatization activities of Petroperu was anticipated to

begin in July 1995, but was delayed due to widespread

unrest and rioting. However, the first Petroperu assets

were sold in June 1996. Recent estimates are that Bolivia is privatizing its public industries in an innovative 77

privatization of Peru’s state oil company will raise $3 way, selling a controlling 50-percent share of each public

billion. company to a single buyer who provides the company

Several foreign investments recently have been made in remaining 50 percent share is to be deposited in a pension

Peru. In June 1996, Pluspetrol, an Argentine petroleum fund for all Bolivians. Bolivia is also attempting to pass

company was awarded exploration and development a new hydrocarbon law that will attract foreign investrights for Peru’s northern oilfields. ARCO received an ment. 78

exploration and production contract for a northern tract in

December 1995. A consortium led by the French However, plans to privatize the state oil company 79

petroleum company Elf Aquitaine was awarded an Yacimientos Petrolifieros Fiscales Bolivianos (YPFB) have

exploration and production contract for an eastern tract in been frustrated by opposition from Bolivia’s confederation

September 1995. Chevron received approval in June 1995 of workers. The intent is to divide YPFB into two 80

to begin exploration and development in the large upstream companies, two downstream companies, and

Camisea natural gas field in Peru's southeastern region, one natural gas transmission company before capitalizing

while the Coastal Peru Ltd, the Peruvian affiliate of a U.S. the resulting companies. The financial and production

company, signed an exploration and development con- requirements to qualify to bid for one of the companies

tract with Petroperu for a tract in central Peru. Also in resulting from the division of YPFB ostensibly exclude the

1995, Occidental won a 20-year development contract for private Bolivian petroleum companies, causing them to

a production tract in a commercially viable field. In join the labor unions in opposing the privatization

August 1994 Mobil's Peruvian subsidiary was authorized process. Chevron is negotiating to fund a seismic proto begin exploration of a tract in the southern Peru. Mobil gram on its share of an exploration block. Enron and

is also a partner in a 30-year exploration and development YPFB have a $400-million joint venture to construct the

joint venture in northwest Peru. Mobil and Royal

Dutch/Shell have agreed to develop the giant Camisea

natural gas field in southeastern Peru through a joint venture. Mobil and Shell Oil are negotiating a contract with

Petroperu for exploration and development rights to two

blocks that surround two of the major Camisea fields.81

Downstream, Petroperu sold 60 percent of the equity in its

largest refinery (102,000 barrels per day) to a consortium

led by Repsol, which included Mobil and YPF, outbidding

PDVSA’s Maraven affiliate. Mobil also bought several 82

gasoline stations from Petroperu.

Bolivia

with capital for expanding its productive capacity. The

83

84

85

86

87
20 Energy Information Administration/Privatization and the Globalization of Energy Markets

"Enron Signs Bolivian Pipeline Deal," Latin American Energy Alert (December 20, 1994). 88

"Peru Action Simmering Despite Privatization Delays," Oil and Gas Journal (August 7, 1995). 89

Oil and Gas Investor, 15 (October 1995), pp. 94-95; and "Bolivia: Thirty-five register for YPFB," Privatization International (October 1, 1995). 90

"Foreign and Private Investment Needed," World Oil, 216 (August 1995), p. 45. 91

"Gas Outlays to Rise in Trinidad/Tobago," Oil and Gas Journal (July 15, 1996), p. 26. 92

The Coastal Corporation, Annual Report 1995, p. 29. 93

350-mile Bolivian portion of the Bolivia-Brazil natural gas substantial natural gas field and is planning the construcpipeline. Exxon completed seismic studies. Mobil has tion of a large liquefied natural gas facility. ARCO, 88 89

an interest in a production block and is negotiating Broken Hill Properties (Australia), British Gas, Chevron,

concessions for two adjoining tracts. Texaco and Mobil Deminex (Germany), ENI (Italy), Enron, Exxon, Premier 90

are members of a consortium with an exploration and Oil (UK), Repsol (Spain), Royal Dutch/Shell, Texaco,

development concession. Unocal, Veba (Germany), and Wintershall (Germany) all 91

Trinidad and Other Latin American

 Countries

Trinidad’s recent privatization of its energy industry has will supply fuel to operate the plant. Also, Texaco has a

led to numerous investments in its natural gas industry 40-percent share in a production block in Paraguay.

(and electricity generation). Amoco has discovered a

92

have petroleum investments in Trinidad.

A few privatization-related projects exist in other Latin

American countries. In El Salvador, Coastal plans to build

and operate a $100-million power plant, which is the first

privately-owned plant in El Salvador. A Coastal affiliate 93
Energy Information Administration/Privatization and the Globalization of Energy Markets 21

"Oil Industry Privatization, Russia Style," Petroleum Economist (February 1996), p. 4. 94

"Petroleum Intelligence Weekly Ranks the World's Top 50 Oil Companies," Petroleum Intelligence Weekly - Special Supplement Issue (December 95

18, 1995).

Energy Information Administration, Country Analysis Briefs 1994 (May 1995), p. 59. 96

Chapter 4. Privatization in Socialist and Former

Socialist Nations

Russia

The fall of the Soviet Empire ushered in an era of mass

political, legal, and economic reforms. In Russia, the move

to a market economy has involved the privatization of

much of Russia’s industry. Russia's large petroleum sector

is currently going through the privatization process,

though initially on a more limited scope and at a slower

pace than other industries. A November 1992 presidential

decree established vertically integrated oil companies

from former oil-producing associations of the Former

Soviet Union (FSU). The gas sector, however, was to

remain intact under the gas monopoly Gazprom.

Like the breakup of Standard Oil in the United States

during the beginning of this century, the FSU’s oil production monopoly was separated along geographic lines,

combining regional oil production associations with

refineries and product distributors, and transforming

them into integrated joint (public and private) stock

companies (see Box entitled “Russia’s New Petroleum

Industry, p. 20”). The final restructuring and consolidation of the industry's assets occurred in 1995 under a

subsequent presidential decree that gave rise to the

current structure of eleven vertically integrated oil

companies. Their estimated size in reserves and 94

production allows them to compete with the world’s

major petroleum companies; eight of the eleven integrated

Russian oil companies are ranked in Petroleum Intelligence

Weekly as among the “World's Top 50 Oil and Gas

Companies for 1994."95

The partial privatization of the Russian oil industry has

consisted of two stages. The first stage, which ended in 96

June 1994, was the commercialization of state enterprises

into joint stock companies and the selling of shares

through vouchers, with ownership limited to workers and

Russian citizens. Thirty-eight to forty-five percent of the

shares in the companies are required to remain in government hands for at least three years, after which the 

In 1995, under the shares-for-cash proposal, the Russian

government implemented a shares-for-loans scheme,

whereby large blocks of government shares in certain joint

stock companies (which included five of Russia's oil

government share may be reduced. The privatization for

their commitment to maintain employment levels and to

make future contributions to the enterprise and 2) the sale

of shares for cash. giants) were auctioned to a group of

Russian commercial banks for cash. The successful

bidders are required to hold the shares in trust for a

maximum of three years in return for providing loans to

the government to reduce its budget deficit. At any time,

the government can buy back its shares. However,

because the affected shares are to be temporarily managed

by the bidder awarded the shares, a controversy has

arisen over the possibility of corruption entering the

bidding process. Consequently, all future auctions have

been terminated and the results of last year's auction are

being challenged. These challenges have arisen from

many parties, including government factions, the public,

commercial banks, and both managers and owners of the

former joint stock companies. Some of these challenges are

currently in court.
22 Energy Information Administration/Privatization and the Globalization of Energy Markets

Russia’s New Petroleum Industry

* Lukoil, formed in 1993, is the largest of Russia’s newly integrated oil companies, with estimated reserves of around

8 billion barrels. It has four refineries with a total refining capacity of 470,000 barrels per day. In 1995, the a

company produced 1.1 million barrels per day.b

* Yukos is the second largest producer, with reserves of around 7.3 billion barrels. The company produced 719,000

barrels per day in 1995. From the company's three refineries, with a combined capacity of 653,000 barrels per day,

1994 refining throughput was 363,490 barrels per day.c

* The third largest producer is Surgutneftegas, with reserves estimated at almost 5.5 billion barrels. The company

has one refinery with a refining capacity of 386,000 barrels per day. 1995 production averaged 669,000 barrels per

day while refining throughput was 243,000 barrels per day.

* Sidanko, with reserves estimated at just over 6.5 billion barrels, has three refineries. The company is the largest

of Russia’s refiners, with a capacity of 790,000 barrels per day. Crude production for 1995 averaged 459,000 barrels

per day, and refining throughput averaged 400,000 barrels per day.

* The newest company, Tyumen Oil Company, produced 456,000 barrels per day in 1995. The company owns one

refinery, with a capacity of 360,000 barrels per day. In 1995, its refining throughput averaged 148,000 barrels per

day. Its reserves are estimated at 6.5 billion barrels. 

* The Siberian Oil Company (Sibneft) owns one refinery and has reserves estimated at 2.9 billion barrels. Production

in 1995 averaged 409,000 barrels per day for the company, while refining throughput was 330,000 barrels per day.

Its refining capacity is 524,000 barrels per day.

* The company Slavneft has two refineries and production of 266,000 barrels per day in 1995. One refinery is located

in Belarus. The combined refinery capacity is 670,000 barrels per day. 

* Rosneft was once the Russian state holding company but was turned into an integrated company during the

restructuring in the second half of 1995 after many of its producers, refineries, and product distributors were

parceled out to other companies. The company will continue to remain solely responsible for the government’s

share under production sharing agreements drawn up with foreign companies. The company now has three

refineries, with 477,000 barrels per day combined capacity. Reserves are estimated at just under 3.3 billion barrels.

Production averaged 254,000 barrels per day while refining throughput was 97,700 barrels per day in 1995.

* The three smaller companies - Eastern Oil Company, Orenburg Oil Company (ONAKO), and Komitek - each has

one refinery. In 1995, Eastern Oil Company’s production averaged 224,000 barrels per day, while refining

throughput was 110,000 barrels per day. ONAKO's production averaged 144,000 barrels per day while its refining

throughput was 88,000 barrels per day. Komitek’s production averaged 89,000 barrels per day while its refining

throughput was 54,000 barrels per day.

 

Reserves and capacity listed for companies: “Petroleum Intelligence Weekly Ranks the World’s Top 50 Oil Companies,” Petroleum a

Intelligence Weekly-Special Supplement (December 18, 1995). It should be noted that different estimates of petroleum reserves for FSU

companies vary considerably. Further, these reserve estimates may not conform with U.S., or Securities and Exchange Commission,

definitions.

Production numbers for all companies: Nefte Compass, Vol.5, No.4 (January 25, 1996), p.7. b

”Russian Refining Shows Signs of Revival, Needs Investment,” Oil and Gas Journal (March 25, 1996), p. 51. c
Energy Information Administration/Privatization and the Globalization of Energy Markets 23

Eales, R. and Bourne, J., “Elf Reduces Its Stake in Enterprise Oil, Share Sale Retains J-V,” Platt’s Oilgram News, Vol. 72, No. 215 (November 4, 97

1994), p. 1.

Energy Information Administration, International Petroleum Statistics Report (June 1996), pp.6 and 8. 98

"Russian Refining Shows Signs of Revival, Needs Investment,” Oil & Gas Journal (March 25, 1996), pp. 48, 51-52. 99

"Russian Refining Shows Signs of Revival, Needs Investment," Oil & Gas Journal (March 25, 1996), pp. 48, 51-52. 100

"Russian Refining Shows Signs of Revival, Needs Investment," Oil & Gas Journal (March 25, 1996), pp. 48, 51-52. 101

Reserves and production:"Petroleum Intelligence Weekly Ranks the World's Top 50 Oil Companies," Petroleum Intelligence Weekly, Special 102

Supplement Issue (December 18, 1995). 

Energy Information Administration, Country Analysis Briefs: 1995 (January 1996). 103

 Energy Information Administration, Country Analysis Briefs: 1995 (January 1996). 104

"Robber Baron," Forbes (September 11, 1995), pp. 13-16. 105

Most of Russia’s new oil companies are operating as produced 20,160 billion cubic feet. Consisting of 10

regional monopolies. Others, like Lukoil and Rosneft, are production associations, Gazprom produces over 90

using their size and influence to expand beyond their percent of Russian gas and owns over 70 percent of the

borders to other countries, and compete with the world country's gas reserves.

majors. For example, in 1994, Rosneft and two of its

subsidiaries at the time purchased a 24-percent interest in In 1993, Gazprom was converted into a state-owned joint

the planned Leuna refinery in eastern Germany. Lukoil stock company, and then began to be privatized in April 97

also has stakes in several production-sharing agreements 1994. As in the oil industry, shares were divided among

and joint ventures in former Soviet Republics and is Gazprom employees and other domestic investors, while

pursuing interests in Europe. 40 percent of its shares is to remain in government hands

Overhauling the Industry

Foreign capital and technology are needed in the oil sector

to help stop the decline in production, which peaked at

12.5 million barrels per day in 1987 and fell to 6.2 million

barrels per day by 1995. The decline in production, 98

which only recently has begun to level off, is attributed

mainly to management and production inefficiencies,

outdated and inadequate infrastructure, lack of investment, declines in domestic demand, low domestic prices,

an inability to export, and uncertainty surrounding property right issues. 

Downstream, the rebuilding of Russia's petroleum infrastructure is also being delayed by the slow pace of foreign

investment. Most of Russia's 29 refineries are old,

inefficient, and in need of modernization. The total operational capacity of Russia's refineries is 6.6 million barrels

per day with a utilization rate of under 60 percent.99

Russia's Ministry of Fuel and Energy has begun to

restructure the refinery sector, with plans to build several

refineries in Russia and to upgrade existing refineries. The

ministry hopes to increase throughput by 17 percent to 4.2

million barrels per day, in the year 2000. Costs of 100

modernizing and expanding the industry during the 1995-

2000 period are estimated at $7 billion.101

Gazprom, the World's Gas Company Giant

One company, Gazprom, dominates the Russian natural

gas industry and is the world's largest gas company, with

reserves of 848 trillion cubic feet. In 1994, Gazprom 102

103

for at least three years. Nine percent of Gazprom's stock

has been set aside for foreign ownership. The sale of

shares (even between private individuals) requires

Gazprom's approval.

In contrast to the oil sector, Gazprom has been relatively

successful at maintaining output, which is mainly in

western Siberia, where over 90 percent of Russia's natural

gas is produced. However, much investment capital is 104

needed for field development and for rehabilitation of

Gazprom's extensive network of pipelines, almost 90,000

miles. Currently, nonpayment from Gazprom's major

customers, Russia's electric utilities, and the republics of

the FSU has developed into a crisis. Revenues that would

have been used for projects have been diverted to

subsidize the electric utilities, since cutting off supplies to

the utility companies is forbidden by law. Of the FSU

republics, the Ukraine owes the largest sum of money.

However, the Ukraine has some unique leverage since

Russian gas accounts for about 60 percent of Europe's gas

imports, of which over 90 percent runs through the

Ukraine. Exports to Europe are one of Gazprom's most

secure sources of cash. Attempts to reduce gas deliveries

to the Ukraine for nonpayment have failed because the

Ukraine began to siphon gas destined for Europe to offset

the shortfall.105

Currently, since transport costs are not taken into account

in establishing price, gas prices remain uniform across

Russia, creating further inefficiencies in the gas industry.

Some critics have recently called for regulating the

industry. Some would even like to see Gazprom dis-
24 Energy Information Administration/Privatization and the Globalization of Energy Markets

Saudi Arabia began outproducing the FSU in 1993. 106

Nefte Compass, Vol. 5, No. 4 (January 25, 1996), p. 7. 107

Energy Information Administration, Country Analysis Briefs: 1995 (January 1996). 108

mantled, but no serious efforts have been made so far to include western Siberia, the Arctic Region, and the

break up their monopoly. Russian Far East. In western Siberia, Occidental is

Even prior to privatization, Gazprom has had relation- enhanced oil recovery projects (the other is located in the

ships with foreign companies, both in and outside the Komi Republic). Amoco has a 50- percent interest in the

FSU. Currently, Gazprom is working on various projects Priobskoye field. In the Arctic Region, the largest

with European and Asian countries that could eventually production-sharing agreement being negotiated is the

lead to the establishment of an intricately connected gas Timan Pechora Company (TPC), led by Texaco (with a 30-

network system throughout these regions. Further, percent ownership share) and including Exxon (30

Gazprom holds an interest in a German natural gas percent), Amoco (20 percent), and Norsk Hydro (20

transmission operation with its German joint venture percent). The joint venture includes the exploration and

partner, Wintershall. development of 1.8 million acres located in the Timan

Foreign Investment

The breakup of the Soviet Union and the move toward a

market-driven economy are seen by many foreign investors as offering new exploration and production opportunities to one of the world’s largest petroleum producing

areas outside Saudi Arabia. Russia first began to open 106

the door to foreign investment in its petroleum industry

through joint ventures. Foreign participation was not

allowed in the initial stage of the privatization of assets.

The second phase, however, did open up opportunities for

foreign investors to take equity stakes in Russia's

petroleum industry. ARCO became the first foreign

company to buy an equity stake of up to 6 percent in the

Russian oil firm Lukoil, paying $250 million for

convertible bonds. 

Joint ventures in upstream activities remain the main

vehicle for foreign investment. Joint ventures are a way

for Russia to gain access to capital and efficient, costsaving technology and for foreign companies to gain a

foothold in Russia. Oil and gas production from joint

ventures has been increasing rapidly over the last few

years, contrary to the trend for total Russian output.

However, the joint ventures currently operating in

Russia's oil and gas sector contribute only a fraction to

overall production. Joint venture production increased by

39 percent in 1995 to 420,000 barrels per day, comprising

7 percent of total Russian output. 107

Foreign joint exploration and development projects in

Russia are mostly within known fields located in three of

Russia’s five largest producing regions. The regions

operating the Vanyoganneft joint venture, one of its two

108

Pechora Basin (with 11 huge oil fields) north of the Arctic

circle. Also located in the Timan Pechora Basin is Conoco’s

joint venture, Polar Lights, the first oilfield developed and

brought on stream by a western company. In the Russian

Far East, Sakhalin Island is the site where three agreements have been negotiated so far. Sakhalin I is being

developed with the Exxon-Sodeco consortium, Sakhalin II

is being developed with the MMMMS consortium

(Marathon-USX, McDermott, Mitsui, Mitsubishi, and

Royal Dutch/Shell), and Sakhalin III has been divided

and will be developed by two different groups—two

blocks are being developed by Exxon and one block is

being developed by Mobil and Texaco. 

Twelve production sharing agreements have reached an

advanced state of negotiation, and await finalization.

However, uncertainty surrounding jurisdiction over resources, licensing, and taxation, have made many oil

companies withhold an estimated $60 billion of investment until legislation that provides adequate investment

guarantees can be passed. For example, Amoco, the Timan

Pechora Company, and the companies operating in all

three of the Sakhalin agreements have chosen not to begin

their projects until the passage of appropriate legislation.

The long-awaited Oil and Gas Law—which was signed

into law in January 1996—was supposed to provide that

framework. However, modifications that were made to

get the law passed did not fully provide the guarantees

desired by foreign investors. Some provisions that foreign

companies find objectionable are: 1) the requirement to

have parliamentary approval for fields in areas defined as

“strategic” and for production sharing agreements not

awarded by tender, 2) the Russian government's right to

modify conditions of a production sharing agreement if
Energy Information Administration/Privatization and the Globalization of Energy Markets 25

"Yeltsin Signs PSA Law As TOTAL Carries The Torch,” Nefte Compass, Vol. 5 No. 1 (January 4, 1996), pp. 1-2. 109

"Reign of the Self-assured Lords; Russian Petroleum Industry; Industry Overview,“ Petroleum Economist (March 1995), p. 33. 110

"Reign of the Self-assured Lords; Russian Petroleum Industry; Industry Overviews,” Petroleum Economist (March 1995), p. 33. 111

“major economic changes” occur during the term of the

agreement, 3) a provision that subsequent individual laws

will determine which fields can be developed under

production sharing agreements, and 4) the lack of recourse available to foreign investors to resolve disputes in

an international tribunal. Thus, the Oil and Gas Law (as 109

passed) is considered a major setback by many of the companies and has forestalled their major investment plans.110

Other barriers to foreign investment include a high tax

burden in Russia. The absence of reliable transportation

and access to foreign markets are other hurdles faced by

both Russian and foreign companies. Access had been

curtailed severely due to uncertainty surrounding changing export restrictions, which include quotas, requirements to export through holders of official special

exporter licenses, and high export taxes. Investors faced a

further barrier when the Russian government instructed

joint ventures to supply the bulk of their oil to former

Soviet Republics, where payment problems have arisen.

Once market conditions improve in Russia, substantial

infrastructure investments will be needed before the

decline in production can be reversed. Physical con- 111

straints on the infrastructure, particularly the inefficient

and outdated pipelines run by the state pipeline monopoly Transneft, plague both foreign and domestic

companies. Furthermore, Russia's vast pipeline system

has seen a change in flow patterns, resulting in supply

disruptions. New pipelines are needed and existing

pipelines must be repaired and upgraded. Plans to

expand the system are being given top priority, but not

much can be done until investments increase.

At present, ambitious plans to develop Russia’s petroleum

resources have faltered largely due to uncertainties

surrounding oil and gas laws, changing tax regimes, and

the ability (both physically and legally) to export crude oil

to international markets. If economic reforms continue

and political stability improves, Russia could rival the

Mideast as a source of crude oil exports. To entice foreign

investment capital, Russia must offer investors the opportunity to earn acceptable returns on their investments. To

do so, Russia must implement laws that protect property

rights, provide access to foreign markets, liberalize prices,

and offer fair taxation. Further, Russia must reduce the

twin destructive influences that widespread corruption

and organized crime have come to have over legitimate

commerce.

Caspian Region

The Pipeline Debate

The Caspian Sea shelf is considered one of the largest

sources of petroleum outside the Persian Gulf and Russia.

The region's largest producers are Azerbaijan and

Kazakhstan. The key to foreign investment in these two

Caspian nations is obtaining secure export routes. Lack of

a secure means of transporting Caspian Sea oil and gas to

world markets has been an impediment to foreign

investment. Until foreign investors can rely on access to

markets, investment in the Caspian region's huge

petroleum potential will remain small.

The lack of pipeline access is limiting production in the

region. Russia is demanding participation in the region

and derives its influence through its control of the only

existing pipelines in the region. Also, disputes with Russia

over the legal status of the Caspian Sea are being

negotiated but they could still disrupt matters. Russia is

seeking to push through new regulations stipulating that

no offshore resource developments should be undertaken

without the compliance of all surrounding states. Russian

oil and gas companies, like Lukoil and Gazprom, have

succeeded in acquiring stakes in large Caspian projects.

Some foreign investors believe it is necessary to bring

Russian participants into their projects to guarantee access

to markets. In the meantime, various alternative routes

have been proposed; however, until they become a reality,

Russia will maintain its dominance in the area.

Many western companies would like to see multiple

routes due to political instability in the area, to provide

alternative access to markets for international companies

involved and to diversify European energy supplies.

However, the political climate for those interested in the

Caspian region has delayed the development of proposed

pipeline routes. The two most promising routes include

pipelines that will link Caspian production fields with the

Black Sea and, thereby, the Mediterranean Sea and

European markets. The first proposed pipeline project is

the Caspian Pipeline Consortium's (CPC) $1.2-billion project to refurbish and connect existing Russian pipelines to

the Black Sea port of Novorossisk via Chechnya.

However, the proposed project was additionally delayed

when Chevron and others did not support CPC's pro-
26 Energy Information Administration/Privatization and the Globalization of Energy Markets

"New Pact for Kazakh-Russian Oil Pipeline,” New York Times (April 29, 1996), p. 8. 112

The AIOC consists of British Petroleum/Statoil, Amoco, Exxon, Pennzoil, Unocal, Lukoil, Itochu, Ramco, Delta-Nimar, Turkey’s TPAO, and SOCAR. 113

“Filling the Vacuum,” Russian Petroleum Investor (May 1996), p. 44.

"Russia, Turkey Vie for Control Over Caspian Sea Oil Riches,” The Christian Science Monitor (April 24, 1996), p. 19. 114

"Caspian Sea Attractive But Controversial," Petroleum Economist (January 1996), p. 36. 115

"Once-Major Oil Province Looks to Caspian for its Comeback; Caspian Sea,” Petroleum Economist (March 1996), p. 8. 116

"Once-Major Oil Province Looks to Caspian for its Comeback; Caspian Sea,” Petroleum Economist (March 1996), p. 8. 117

" Worldwide Refining Report,” Oil and Gas Journal (December 18, 1995), p. 57. 118

posals on financing and limited ownership of the 900-mile and once major, oil-producing region of the FSU.

Caspian Sea oil pipeline. As a result, the original three- However, Azerbaijan is now opening its large reserves,

member CPC consortium (consisting of Russia, estimated at 10 billion barrels, to foreign investment

Kazakhstan, and Oman) negotiated and recently signed a through joint ventures with the State Oil Company of

new accord for a joint protocol to restructure the CPC, Azerbaijan (SOCAR). Foreign investment is needed to

inviting Chevron and seven other international energy restructure and modernize the outdated and inefficient

companies to join them, with an offer of 50-percent infrastructure inherited from the FSU. The Caspian

combined ownership. The consortium has awarded the pipeline and territory disputes extend into Azerbaijan,

following shares: Chevron (15 percent), Lukoil (12.5 which is also in need of an outlet to export markets.

percent), Rosneft (7.5 percent), Mobil (7.5 percent), British

Gas (2 percent), Agip (2 percent), Oryx (1.75 percent), and The two largest international joint venture projects inKazakhstan’s Munaigaz (1.75 percent). The foreign clude the Shakh Deniz prospect, with reserve estimates of 112

companies will be responsible for financing the pipeline. 4-5 billion barrels, and the 1-billion barrel Karabakh

The second pipeline project arose from an agreement project between SOCAR and the AIOC. The 30-year

between Russia and the 12-member Azerbaijani project is to explore the three large offshore Caspian fields

International Oil Consortium (AIOC). The agreement of Azeri, Chirag, and Gyuneshli. Initial oil production is 113

between Russia and this largely western consortium gives expected sometime in late 1996, with peak production

these companies permission to use Russian pipelines to estimated at 700,000 barrels of oil per day by 2010. In

export oil due to be produced by the end of 1996 through addition, France's Elf Aquitaine has recently signed a

two alternative export pipeline routes from Baku. One production-sharing agreement with SOCAR for a separate

route is north through the CPC pipeline, which crosses onshore/offshore block in the Shakh Deniz area. 

Russia, and the other route is west through a pipeline to

be built across Georgia. Both alternatives end at the Black The second largest Azerbaijan joint venture project is

Sea. The agreement is waiting final approval from the being explored by the Caspian International Petroleum

Russian parliament. Company, consisting of Pennzoil, Agip, Lukoil, and

Turkey is undertaking its own plans to build a pipeline. tion, development, and production of the Karabakh

The planned project is a $1.8-billion project to build a prospect in the Azerbaijan sector of the Caspian Sea. 

1,047-mile oil pipeline linking the Caspian fields through

Georgia to the port of Ceyhan in the eastern Mediter- In addition, Exxon and SOCAR signed an agreement in

ranean. These plans however, have given rise to June 1996 for two Caspian sea exploration blocks, while 114

concerns over the environmental damage increased oil Occidental, Chevron, Mobil, and Unocal are actively seektraffic through the Dardanelles would cause. One other ing opportunities in offshore Azerbaijan. 

option involves connecting pipelines in the FSU Caspian

region to pipeline networks in Iran, although this latter Downstream provides another potential target for foreign

option has met with strong opposition from the United investment. The state-owned monopoly, SOCAR, has 2

States and Israel. refineries with a refining capacity of 441,808 barrels per

Azerbaijan

Political instability associated with repeated changes of

government has limited reform in Azerbaijan, the oldest,

115

prospect. The Shakh Deniz prospect is an $8-billion 116

SOCAR. The $1.7-billion project includes the explora- 117

day. Foreign investment will be necessary to help 118

finance the modernization proposal to upgrade the

refineries, but current investment plans have been delayed due to the previously-cited pipeline dispute and

debt owed by the refineries for past deliveries. 
Energy Information Administration/Privatization and the Globalization of Energy Markets 27

"Pipeline Problems Block Oil Sector Development," Petroleum Economist (April 1996), p. 10. 119

"Pipeline Problems Block Oil Sector Development," Petroleum Economist (April 1996), p. 10. 120

"OGJ Worldwide Production,” Oil and Gas Journal (December 25, 1995), p. 43. 121

"Pipeline Problems Block Oil Sector Development,” Petroleum Economist (April 1996), p.12 122

"Samson Blows Away Hurricane, Wins Bid For Kazak Producer,” The Oil Daily (June 7, 1996), p. 5. 123

"Kazakhstan Sets Up Test Case for Oil Privatization," Financial Times (April 30, 1996), p. 25. 124

"Mobil Takes 25 Percent Piece of Tengiz Field,” Platt’s Oilgram News (April 18, 1996), p. 1. 125

"Pipeline Problems Block Oil Sector Development,” Petroleum Economist (April 1996), p. 11. 126

Kazakhstan

After Kazakhstan became independent from Russia in

1991, the country hoped for rapid development of its

Kazakhstan's recoverable reserves of crude and

condensates, which are 21.9 billion barrels and 81.2 trillion

cubic feet of gas and are mainly located in the Caspian

Sea. Probable reserves amount to 51.3 billion barrels of 119

oil and 264.9 trillion cubic feet of gas. However, 120

Kazakhstan has no direct access to world markets.

Further, Kazakhstan suffers from an under-developed

and inefficient petroleum pipeline infrastructure. As a

consequence, production of one of the world's largest

petroleum areas has remained largely unexploited. Stateowned companies in Kazakhstan currently account for

most of the 1995 average production of 420,000 barrels per

day, which could more than double by the year 2000 if

there were guaranteed access to markets.121

Restructuring the oil industry included setting up the state

holding company Munaigaz to coordinate all oil industry

activities. Prior to an international tender last month, 122

there were seven producers and three refineries under

Munaigaz control. There has been a proposal to end

Munaigaz' monopoly, following the Russian example, by

creating vertically-integrated oil companies. In what is

being called a test case for privatization, Kazakhstan held

an international auction for shares in two of its producers,

Aktyubinskneft and Yuzhneftegas. These companies have

combined proven reserves of more than 2 billion barrels,

and also own the 150,000-barrels-per-day Chimkent

refinery. Samson Investment Company, a U.S. firm, won

a 100-percent stake in the Kazak producer Yuzhneftegas.

Samson submitted a joint bid with the local investment

firm Munainvest, fending off a single challenge from

Canada's Hurricane Hydrocarbons. The Swiss Trading

Company, Vitol, won the tender for a 90-percent stake in

Kazak's Chimkent oil refinery, but the terms have not

been settled. Kazak companies’ large debts, non-pro- 123

ductive assets, and lack of transparency made investors

cautious. Companies also were concerned about the many

preconditions associated with the awarding of shares,

particularly the required pledges for investment, social

guarantees, payment of old debts, and environmental

liability.124

Thus far, in Kazakhstan, privatization has mainly been

limited to joint ventures, with many of the republic's most

attractive fields being acquired by international companies. In 1993, Chevron began a long-term investment in

Kazakhstan at one of the largest fields in the world, the

Tengiz oil field with 6 billion barrels of proven reserves.

The 40-year joint venture between Chevron (50 percent)

and the government-owned producer Tengizmunaigaz

could produce 700,000 barrels of crude per day and bring

in $20 billion in investment. However, lack of a reliable

export route has led production to be cut to 60,000 barrels

per day, even though current capacity is 120,000 barrels

per day. The high hydrogen sulfide content of the field

has also posed potential transportation and marketing

problems. Chevron, which has spent over $1 billion

already, has delayed expansion plans until the pipeline

issue is resolved.To help finance its share of the project,

Kazakhstan sold half of its 50-percent stake to Mobil in

early 1996 for $1.1 billion. In 1993, seven foreign 125

companies, including the British Petroleum/Statoil

partnership, Royal Dutch/Shell, British Gas, Total, Agip,

and Mobil, signed a contract for seismic testing in

Kazakhstan's area of the Caspian Sea region, in exchange

for the right to select two blocks for further exploration

and development and the right to bid on the remaining

blocks. In addition, Mobil (50 percent) and three Kazak 126

partners are exploring the western Atyrau and northwest

Aktyubinsk regions in the $80-million, 25-year, TulparMunai venture. In 1994, Oryx Energy signed two

agreements to explore Kazakhstan's eastern Caspian Sea

area. One involves the exploration of a large block in

western Kazakhstan, in which Exxon later bought a 50-

percent stake. The other is a 50-50 joint venture with two

Kazak partners to develop the Arman field in the north

Buzachi Peninsula.

Despite large gas reserves, development of natural gas

resources also has been limited due to inadequate

infrastructure. The country currently is a net importer of

natural gas. The only existing export route for natural gas

is a Gazprom pipeline that runs through Russia. This has

led British Gas and Agip, who have exclusive rights to

negotiate for reserves of the Karachaganak field, estimated to hold 16 trillion cubic feet of gas and 2.4 billion

barrels of condensate, to bring in Gazprom as a partner
28 Energy Information Administration/Privatization and the Globalization of Energy Markets

"Worldwide Refining Report,” Oil and Gas Journal (December 18, 1995), p. 57. 127

with a 15-percent stake. However, a production-sharing countries are proceeding with various degrees of privatiagreement has not been finalized and Gazprom has yet to zation, such as oint ventures. Foreign investment is higher

put up its share of the equity. in the countries where reform has made the most proThe pipeline issue also is holding up downstream projects.

Kazakhstan has three refineries, with a refining capacity

of 393,611 barrels per day, that are in need of Russian 127

crude deliveries, lower demand, and limited access to

international export markets have reduced refining

throughput and delayed modernization plans to expand

capacity.

Eastern Europe

Economies in Transition

Eastern European countries are also undergoing major

political and economic structural reforms. Previously

under strong central government control, they have begun

to decentralize their economies, transforming them

through various programs consisting of industry restructuring and privatization. Former state-owned firms

are being internally restructured, shifting from public

ownership with state control to various types of private

ownership. To address the need of potential investors for

clearly defined property rights, each country has

attempted to develop viable legal structures, contract

laws, regulatory systems, capital markets, trade policies,

and domestic bond and stock markets. However, while

investment has not been as forthcoming as

anticipate—due to the slow pace of reform—many

gress, namely the Czech Republic, Hungary, and Poland.

The diversity of reform among the countries in eastern

Europe—which includes voucher sales, direct sales, and

National Investment Funds—is related to how each

country addresses the issue of sovereignty over strategic

national assets. 

As in the FSU, the Communist regimes left eastern

European countries with bloated and inefficient hydrocarbon industries that suffered from decades of neglect,

outdated technology, heavy debt, and environmental

problems. Unlike Russia's large reserves, eastern Europe

produces little oil and natural gas—only Romania has a

sizeable endowment of reserves. The eastern European

countries are dependent on imports, mainly from Russia,

to meet primary energy demand. 

The condition of eastern European refining is similar to

that of upstream petroleum. All eastern European

countries have refinery industries (Table 2). Most are

badly in need of restructuring and upgrading. The

petroleum marketing sector is the fastest growing sector

in eastern Europe's energy industry, partly due to the

introduction of foreign competition in many countries. 

Thus far, most energy enterprises are still publicly-owned

and government-run. However, to meet the petroleum

needs of those economies where privatization efforts are

strongest, private ownership is beginning to emerge. For

Table 2. Eastern Europe Petroleum Statistics for 1995

Country (million bbl) (b/d) (b/d) January 1, 1996 (b/cd)

Estimated Proved

Oil Reserves as of Estimated 1995 Actual 1994 Number of

January 1, 1996 Oil Production Oil Production Refineries as of Refining Capacity

Albania . . . . . . . . . . . . . . . . . . . 165 12,000 11,500 3 40,000

Bulgaria . . . . . . . . . . . . . . . . . . 15 1,000 1,000 3 300,000

Czechoslovakia . . . . . . . . . . . . 15 7,000 8,000 5 302,139

 Czech Republic . . . . . . . . . . . -- -- -- 4 187,139

 Slovakia . . . . . . . . . . . . . . . . . -- -- -- 1 115,000

Hungary . . . . . . . . . . . . . . . . . . 128 70,000 70,000 3 232,000

Poland . . . . . . . . . . . . . . . . . . . 31 8,000 13,000 7 352,000

Romania .................. 1,606 137,000 138,000 10 655,434

Sources: Reserves & Production: “Special Worldwide Production,” Oil and Gas Journal, December 25, 1995. Refining: “Special Worldwide Refining,”

Oil and Gas Journal (December 18, 1995), pp. 48-9. 
Energy Information Administration/Privatization and the Globalization of Energy Markets 29

"Eastern Europe - Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 22. 128

"Eastern Europe - Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 22. 129

"Albania Aims to Accelerate Oil and Gas Exploration,” Financial Times (November 29, 1995), p. 57. 130

"Eastern Europe - Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 22. 131

"Albania Aims to Accelerate Oil and Gas Exploration," Financial Times (November 29, 1995), p. 57. 132

"Albania Aims to Accelerate Oil and Gas Exploration," Financial Times (November 29, 1995), p. 57. 133

"Eastern Europe - Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 23. 134

"Eastern Europe - Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 23. 135

"Eastern Europe - Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 23. 136

example, Hungary has sold an 18.8-percent stake in its international onshore licensing round was the concession

vertically integrated petroleum company, MOL. The for two onshore blocks not awarded in the first licensing 128

Czech Republic merged its two largest refineries and sold round and one offshore block in the Adriatic Sea, which

49 percent to IOC, a western consortium. previously had been relinquished by Agip of Italy.

Eastern Europe under central planning was virtually

closed to foreign investors. Foreign capital could play a

pivotal role in helping diversify energy supplies, increase

energy efficiency through modernization, and improve

the environment. Although foreign direct investment has

increased in these areas, inflows remain modest. Foreign

direct investment has been slow to materialize due to

continuing macroeconomic instability and insufficient

institutional reforms. To date, most foreign investment has

been through joint ventures.

Each country has a unique socioeconomic context, causing

variation in the transition process across all countries in

the region. Different ownership structures are emerging

under different privatization schemes. Reform has continued, even in the face of economic decline and decreasing production since the fall of communism and the

beginning of efforts to move to market economies. Only

now are these countries beginning to recover economically, spurred by exports and increasing domestic

demand.

Albania

After decades of neglect, Albania began to reform its oil

and gas industry by establishing a state-owned oil and gas

company and allowing joint ventures with foreign

companies, mainly in the form of production-sharing

agreements. The national oil and gas company, Albpetrol,

was established in 1992. It currently controls 46 energy

and petroleum-related enterprises. 129

Foreign oil companies were initially restricted to offshore

drilling. Since legislation opened up onshore conces- 130

sions to foreign investors in 1993, there have been two

international onshore licensing rounds. In the first round,

foreign companies were invited to bid for three oilrecovery enhancement projects. Included in the second 131

132

Over the past four years, $100 million has been invested

by foreign oil companies, with a further investment of $60

million expected during 1996.133

Bulgaria

Bulgaria's economy, which was one of the Eastern

European economies most closely patterned after the

Soviet system, is one of the most energy-intensive in the

world. Although Bulgaria generates 40 percent of its

electricity from nuclear energy, the country is also heavily

dependent on coal. The country's dependence on coal 134

has created severe environmental problems.

Due to constant shifts in government, economic reform in

Bulgaria has been among the slowest in eastern Europe.135

Heavy subsidies and government-controlled prices still

exist in the energy sector. Privatization of the energy

sector was excluded from the 1995 privatization program,

although the country's two largest refineries, Neftochim

and Plana,were placed in a separate category reserved for

enterprises that require special government approval

prior to privatization. Even so, Bulgaria was the first

eastern European country to offer petroleum exploration

concessions to western countries. Three international 136

auctions - in 1991, 1993, and 1995 - have been held so far.

Eight companies received oil exploration licenses in the

first, while no licenses were awarded in the second. Final

results of the third have yet to be announced. Production

results have been mixed. In addition, foreign filling

stations have been allowed to compete with the dominant

state-owned oil and petroleum products distributor,

Bulgargas.

Bulgaria is trying to use its unique position (connecting

supply from the countries of the Commonwealth of

Independent States and from the Middle East with

western European markets) to reestablish links with

Russia's newly integrated oil companies. However, the 
30 Energy Information Administration/Privatization and the Globalization of Energy Markets

"Eastern Europe - Reluctant to Sell," Petroleum Economist (September 1995), p. 22. 137

"Reformed Prague Gets to Join the Club: Membership of the Capitalist OECD Grouping is Seal of Approval," Financial Times (November 28, 1995), 138

p. 2.

"Eastern Europe—Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 23. "Czech Refinery Deal, Long in Making, Finally 139

Signed," Platt's Oilgram News, Vol. 73, No. 221 (November 16, 1995), p. 6.

"Eastern Europe—Reluctant to Sell," Petroleum Economist Vol. 62, No. 9 (September 1995), p. 23. "Czech Refinery Deal, Long in Making, Finally 140

Signed," Platt's Oilgram News, Vol. 73, No. 221 (November 16, 1995), p. 6.

"Eastern Europe—Reluctant to Sell," Petroleum Economist (September 1995), pp. 23-4. 141

Vacova, T. "Slovakia's 'Golden Eggs' Law May Deter Investors," The Reuter European Business Report (July 14, 1995). 142

pipelines establishing these links have had oil transit Downstream, the Czech government consolidated operadisrupted by the United Nations’ embargo against Iraq tions prior to privatization. The two largest Czech

and the outbreak of war in the former Yugoslavia. In May refineries, Chemopetrol and Kaucuk, were merged to

1995, Gazprom and Bulgargas set up a joint-venture form Czech Refineries, with the state's 51-percent interest

company to control the flow of Russian gas through being retained by Unipetrol--a newly established holding

Bulgaria, build gas supply systems, invest in Bulgaria's company, which currently owns the remaining petro2,000-kilometer gas network (linked to Russia via two chemicals industry, and Benzina, the partially privatized

pipelines running through Ukraine and Romania), and petroleum distributor. In November 1995, the largest

market Russian gas to other countries. refinery privatization in eastern Europe and the Former 137

Czech Republic

Separated from Slovakia on January 1, 1993, the Czech

Republic has been an aggressive economic reformer with

foundations of a market economy firmly in place. On

November 28, 1995, the Czech Republic became the first

post-Communist state in eastern Europe to sign an agreement to join the Organization for Economic Cooperation Slovakia is largely dependent upon imported oil and gas.

and Development (OECD), becoming the group’s 26th Slovnaft, the country's third largest petroleum company,

member. is the industry's refiner and petrochemical company. By 138

Like Bulgaria, the country produces little energy, except Slovnaft was already 20-percent privatized. In 1995, to

for coal. The country is a net importer of all energy increase its attractiveness as an investment prospect,

supplies and is largely dependent on Russia for its energy Slovnaft bought a 51-percent stake in Benzinol, which

imports. Even though the Czech Republic is considered a controls 60 percent of the retail gasoline market and is a

lead reformer in eastern Europe, the country has yet to major Slovnaft customer. The government is negotiating

finalize plans on how it will restructure its oil and gas with Agip of Italy to buy an additional 34-percent stake in

industry. Benzinol. The company recently offered additional equity

Even though the Czech Republic is considered a lead money for a modernization program. 

reformer in eastern Europe, the country has yet to finalize

plans on how it will restructure its oil and gas industry. There is uncertainty regarding the pace of structural

Currently, the gas distributor Transgas remains under full reforms. Privatization virtually came to a halt in late 1994,

state control. Initially, with only one pipeline—the and decisions to dispose of state property have been

Friendship line from Russia—and with refining badly in reversed on several occasions. In July 1995, the “Golden

need of upgrading, the Czech Republic has sought foreign Egg Law” was passed. It listed dozens of firms that will

investment to help it fully integrate with Europe and to not be privatized or in which the state will keep a right of

reduce its dependency on Russian oil. In March 1996, the veto over key decisions. Utilities will remain under

Czech Republic will acquire alternative sources of oil with permanent state control, and the state will keep decisive

the opening of its second crude pipeline. The pipeline to influence on the oil refiner Slovnaft and the energy

Germany was built under an agreement between the two company Nafta Gbely. Also passed was a law that

countries. scrapped the final wave of voucher privatizations and

139

Soviet Union took place when the Czech government

signed a $672-million agreement to sell the remaining 49-

percent state-owned share in Czech Refineries to IOC, a

consortium including Royal Dutch/Shell, Agip, and

Conoco.

Slovakia

the time of Slovakia’s separation with the Czech Republic, 140

through a global-depository-receipt offering to raise 141

142
Energy Information Administration/Privatization and the Globalization of Energy Markets 31

Janowski, T. "E. Europe Faces Main Privatisation Tasks," The Reuter European Community Report (January 17, 1996). 143

"MOL Issue Priced at Bottom of Equity Range—Equity Offerings,” Financial Times (November 22, 1995), p. 35. 144

"Privatizing in Hungary: A Door Reopens," The New York Times (October 17, 1995), p. D1. 145

"Hungary's Privatization Program Advances," Oil and Gas Journal (September 11, 1995), p. 26 146

"Eastern Europe—Reluctant to Sell; Special Report: National Energy Companies—A New Era; Industry Overview,” Petroleum Economist (September 147

1995), p. 22.

"Eastern Europe—Reluctant to Sell; Special Report: National Energy Companies—A New Era; Industry Overview,” Petroleum Economist (September 148

1995), p. 22.

"MOL Announces Nine Months Results," PR Newswire (December 15, 1995). 149

"Privatizing in Hungary: A Door Reopens,” The New York Times (October 17, 1995), p. D1. 150

"Privatizing in Hungary: A Door Reopens," The New York Times (October 17, 1995), p. D1. 151

"Hungary Prepares for Gas Sale with Privatization Law,” East European Energy Report (May 22, 1995). 152

"Hungary Petroleum Privatization Limited by Economic Concerns," Oil and Gas Journal (July 4, 1994), pp. 24, 27-8. 153

Janowski, T. "Feature—Poland Sees No Big Change in Privatization Course," The Reuter European Business Report (February 26, 1996). 154

replaced them with a direct sale method. However, gas importing monopoly and, at the time, the country's

foreign participation has been the lowest since the incep- second hydrocarbons trader after MOL) were transferred

tion of privatization in 1992, with only 3 out of 232 foreign to MOL. Both MOL and its new Mineralimpex subcompanies accepting direct sales offers between January sidiary have been cutting staff, and MOL expects a proand August 1995. fitable 1995. 143

Hungary

Hungary has embarked on one of the most ambitious of

privatization schemes. Hungary is the only country in the

region to build a vertically integrated company, the

Hungarian Oil and Gas Company (MOL). MOL was 144

founded in 1991 and is Hungary's largest company. Its

utility segment ranks as one of Europe’s top 15 oil and gas

utilities. Currently, Hungary produces about one-fourth

of its oil and half its natural gas needs. MOL accounts for

90 percent of the nation's oil and gas production, refining

capacity, and reserves. Political uncertainty in the 145

Ukraine and continuing problems with pipeline access to

the Adriatic has jeopardized secure energy supplies. As a

consequence, MOL has sought to diversify its gas supplies

and to develop oil and gas reserves abroad by acquiring

exploration licenses in the Former Soviet Union, Algeria,

and Tunisia. In 1994, MOL and OMV, Austria's state oil

company, agreed to jointly construct a 120-kilometer pipeline linking Baumgarten, Austria, and Gyor, Hungary,

providing Hungary with its first access to western gas.146

Germany also has agreed to sell western natural gas to the

company.147

In addition, MOL is seeking joint venture partners in oil

and gas exploration and production. After several

postponements, the first bids for domestic exploration

were offered in 1994, with the five concessions being Since 1989, Poland has undergone several changes in

awarded to a consortium of Blue Star, Coastal, and government, a fact that has delayed privatization. In

affiliates of Occidental and Mobil. 1995, after a three-year delay, Poland finally took the first 148

Before privatizing, MOL began restructuring. In May by launching their long-awaited mass privatization initia1995, the assets of Mineralimpex (previously Hungary's tive. Instead of a voucher system, Poland has set-up 15

149

150

In June 1995, the Hungarian parliament passed the longawaited Privatization Act. After a promising beginning

and several false starts, the first wave of energy sector

privatization went forward with a "combined offer"

during October/November 1995. Companies in western

Europe, Russia, and the U.S. competed for stakes in

Hungary's oil, gas, and electricity businesses. In

November 1995, Hungary sold an 18.8-percent stake in

MOL, the first time ownership in an eastern European oil

company had been sold.151

Foreign investment and competition have been visible in

the retail sector for some time. Two decades ago, Shell

Hungary was allowed its first franchised filling station

through a local agreement with the state trading company, Interag. By 1993, the company was 100-percent 152

Shell-owned. By 1994, Shell had 15 percent of all service

stations and held a 20-percent share of product sales.

MOL still leads the retail gasoline market in Hungary,

with 50-percent of the service stations and a 35-percent

share of product sales. Other major gasoline marketers in

Hungary include Mobil, Exxon, Conoco and Total, with

each holding about a 5-percent share of the country’s

gasoline market.153

Poland

154

serious steps to privatize major state-owned enterprises
32 Energy Information Administration/Privatization and the Globalization of Energy Markets

Janowski, T. "Feature—Poland Sees No Big Change in Privatization Course," The Reuter European Business Report (February 26, 1996). 155

"IEA/Hungary/Poland: Reports Praise Progress in Energy Liberalisation,” Europe Energy (July 14, 1995). 156

"Chevron Deal in Poland,” The New York Times (June 14, 1995), p. 20. 157

"Amoco to Retail Petrol in Poland,” Financial Times (June 14, 1995), p. 32. 158

"Amoco to Retail Petrol in Poland,” Financial Times (June 14, 1995), p. 32. 159

"Eastern Europe—Reluctant to Sell,” Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 22ff. 160

"Eastern Europe—Reluctant to Sell,” Petroleum Economist, Vol, 62, No. 9 (September 1995), p. 24. 161

National Investment Funds (NIFs). The NIFs are joint and later privatize the oil sector. Poland's second largest

stock companies that were allocated 60-percent shares in oil refinery, Rafineria Gdanska S.A., has signed a contract

44 industrial companies created from the privatization of with Chevron to use the company's licensed technology in

state enterprises. a planned $400-million upgrading. Plock and Gdansk,

The government is currently deciding on how to restruc- programs worth more than $1.5 billion. 

ture and privatize the Polish oil and gas industry.155

Poland intends to rapidly modernize its energy industry, Polish authorities have introduced competition in gasoline

but to date no part of its energy industry has yet been wholesaling and retailing, and both foreign and domestic

privatized. As a result of legislation passed in 1995, suppliers are entering the market. Foreign investment in

privatization in most energy sectors, including coal mines, the Polish gasoline retailing business has been modest so

oil and gas sectors, and energy distributors, requires far due to uncertainties. Norway's Statoil and Finland's

parliamentary approval. Poland's modest oil onshore pro- Neste have 11 gasoline stations each, Conoco has nine,

duction is in the hands of the Polish Oil and Gas Company Esso and Royal Dutch/Shell have six each, and Germany's

(POGC) and offshore production is performed by the joint Aral has four. Amoco is expanding into gasoline retail

stock company Petrobaltic. The POGC, one of the last fully operations in Poland. The company opened its first

integrated, state-owned monopoly petroleum enterprises stations in Poland this year, with plans to build 150 of

in Europe, has sole responsibility for exploration and them over the next decade. Texaco is about to start its own

production of both gas and oil, gas imports, transmis- gasoline station building program and Sweden’s OK

sion, storage, and distribution. The government has tenta- Petroleum bought a controlling interest in Va-Po SA,

tively adopted a restructuring plan for the POGC which owns 22 gasoline stations.

intended to transform it (in stages) into separate, independent companies for exploration, drilling, production,

transmission and distribution. The government is considering limiting foreign ownership in such privatized

major companies to minority stakes.

The country produces only around 1 percent of its domestic oil needs. Russia supplies Poland with 60 percent of 156

its natural gas. However, unlike other eastern European

countries, Poland is less dependent on Soviet crude oil

due to its Baltic Sea ports. In 1991, licensing for gas

exploration was opened to domestic and foreign

companies. Since then, two licensing auctions have been

held. Several foreign companies have participated, including Exxon, Shell, British Gas, and Amoco. 

Downstream, seven refineries organized as joint stock

companies supply the bulk of the country's product needs.

Under preliminary government plans, they are to be

merged with CPN, the state-owned gasoline distribution

network. Shares in refineries are to be offered separately

to strategic investors. Minority shares (of 20 to 30 percent)

in refineries may go on sale under a plan to consolidate

157

the two main refineries, are embarking on modernization

158

159

Romania

The Romanian oil and gas industry is eastern Europe's

largest oil and gas producer. It also has the region’s largest

petrochemical industry. With 1.6 billion barrels of 160

proved oil reserves, more than four times the total of other

eastern European countries combined, it has the most to

gain from energy foreign investment. However, along

with Bulgaria, its reform is one of the slowest in eastern

Europe.

Romania's oil and gas industry was restructured twice, in

1990 and in 1993. It now consists of a series of state- 161

owned units. These include: Rompetrol (responsible for

oil and gas imports, and licensing foreign companies),

Petrom (oil exploration and production), Conpet (oil

distribution), Peco (gasoline distribution and sales), and

Rafirom (refining). Romgas is the nation’s gas distribution

company. There is a possibility that further restructuring

will take place, creating a single, vertically-integrated

company in which up to 49 percent of the equity could be

sold.
Energy Information Administration/Privatization and the Globalization of Energy Markets 33

"Romania Pinpoints Blocks on Offer,” Oil & Gas Journal (May 13, 1996), p. 42. 162

"Eastern Europe—Reluctant to Sell," Petroleum Economist, Vol. 62, No. 9 (September 1995), p. 23. "Czech Refinery Deal, Long in Making, Finally 163

Signed," Platt's Oilgram News, Vol. 73, No. 221 (November 16, 1995), p. 6.

"Romania Invites Tenders for Oil and Gas Exploration,” Financial Times (April 24, 1996), p. 37. 164

"Eastern Europe—Reluctant to Sell,” Petroleum Economist (September 1995), p. 24. 165

"U.S. Companies Poised for Crack at Romanian Privatization Drive," The Oil Daily, Vol. 45, No.62 (March 31, 1995), p. 1. 166

"U.S. Companies Poised for Crack at Romanian Privatization Drive," The Oil Daily, Vol. 45, No.62 (March 31, 1995), p. 1. 167

"Western Firms Pick up Pace on Retail Growth in Eastern Europe,” The Oil Daily, Vol. 45, No.143 (July 28, 1995), p. 2. 168

Energy Information Administration, Country Energy Profile, China (Washington, DC, February 1995), p. 17. 169

After a decade of declining crude oil production (attr- In marketing, Royal Dutch/Shell was the first western

ibuted both to neglect and to the use of outdated firm to open and operate retail gasoline stations in

technology), production between 1994 and 1995 began to Romania. Other western companies, such as Amoco, are

level off. Currently, the country produces about half its considering retail investment options. 162

oil requirements and consumption is rising rapidly.

Romania needs to invest in further exploration and has

therefore attempted to encourage foreign investment.

Even though privatization legislation was passed in 1991,

the lack of progress in restructuring and privatizing has

thus far been discouraging to foreign capital. However,

even with later modifications, the law still lacks clear

guidelines for negotiating leases and does not allow

disputes to be settled by international arbitration. Due to

these uncertainties, Amoco, which has an onshore concession, has threatened to pull out of its proposed $60-

million investment to build a network of 60 filling

stations. Most foreign investment in the energy sector is 163

performed through joint ventures.

In 1992, Romania held its first licensing auction since the

end of Communism, offering both onshore and offshore

concessions. Shell and Amoco each were awarded an

onshore block and an Enterprise Oil-Canadian Occidental

consortium was awarded two offshore blocks. Ro- 164

mania's National Agency for Mineral Resources (NAMR),

a newly formed agency created in 1995, is currently

holding its first, and the country's second, licensing auction that includes 15 new blocks, all onshore, except one

that includes an offshore block in the Black Sea

continental shelf. 

Romania's refining industry is inefficient and suffers from

overcapacity. The use of outdated technology raises the

price of the end product to over twice that of imported refined products. Romania is seeking foreign investment to

help finance a $230-million planned investment program

to upgrade its five largest refineries (which account for

nearly 85 percent of the country's total capacity) to western standards by 1999. The other five refineries will be 165

devoted to petrochemicals. Many problems have delayed

the project, and western companies, including Amoco and

Texaco, are reevaluating prior commitments.166

167

168

China and Vietnam

China and Vietnam are largely agrarian societies ruled by

Communist parties. To rebuild their economies and

maintain their monopoly power, the ruling parties have

allowed fragments of a market economy to develop in a

move towards socialist market economies. These reforms

include opening up areas to foreign participation previously inaccessible. Privatization in these areas has been

restricted mainly to production-sharing agreements

(PSAs) and joint ventures.

Unlike the countries of the FSU and Eastern Europe, both

China and Vietnam in the past decade have experienced

tremendous growth, which has increased the demand for

energy supplies. In recent years, both countries have

maintained a positive trend in the production of energy

resources. However, China's energy sector recently has

had trouble keeping up with its rapidly expanding economy, which is outstripping its energy supplies and raising

its dependence on imported oil. Vietnam's emerging

energy industry, on the other hand, is developing as a

potential major net exporter of petroleum products and

gas in the Asian-Pacific market.

China

China's petroleum industry is still under strong central

control. Little has been done to allow foreign ownership of

China's assets in its oil and gas industry. The industry is

dominated by four large state-owned corporations: two

state petroleum companies and two downstream companies. The largest of the two petroleum companies is 169

the Chinese National Petroleum Corporation (CNPC), an

integrated industrial organization founded in 1949 to

plan, organize, and manage the exploration and develop-
34 Energy Information Administration/Privatization and the Globalization of Energy Markets

1995 production: Energy Information Administration, International Petroleum Statistics Report,(Washington, DC, June 1996), p. 5. 170

"China’s Upstream Programs Advance Onshore and Offshore,” Oil and Gas Journal (September 25, 1995) p. 32. 171

"China's Upstream Programs Advance Onshore and Offshore," Oil and Gas Journal (September 25, 1995), p. 31. 172

"China's Upstream Programs Advance Onshore and Offshore," Oil and Gas Journal (September 25, 1995), p. 31. 173

CNOOC, ARCO and Kuwait's Santa Fe Co. are jointly developing the field. 174

Energy Information Administration, Country Analysis Briefs: 1995 (January 1996). 175

ment of onshore oil and natural gas resources. The CNPC auctions are located in this area. Crude oil production in

controls more than 95 percent of China’s onshore oil and 1994 from the Xinjiang region in northwest China was

natural gas fields. All offshore oil and gas exploration 225,000 barrels per day. The three major basins in the

andproduction is under the control of the second Xinjiang region are Tarim, Turpan-Hami, and Junggar.

petroleum company, the China National Offshore Oil and Experts believe Tarim is the most promising as far as the

Gas Corporation (CNOOC). It was founded in 1982 to act possibility of finding “elephant-class” discoveries.

as the state representative in joint developments with However, Tarim's remoteness and lack of infrastructure

foreign companies of China's offshore oil and gas have made it difficult for transportation facilities to keep

reserves. The China National Petrochemical Corporation up with discoveries, temporarily reducing production. To

(Sinopec), the state refiner, was formed in 1983 to develop entice foreign companies who are concerned about getting

an integrated Chinese refining and petrochemical system. their oil to market, China has launched a massive

The China National Chemical Import and Export infrastructure expansion program in this region which

Corporation (Sinochem) is the import and export com- will include pipelines, a trans-desert highway, parallel rail

pany responsible for trading international crude oil and lines, and expanded storage.

oil products. It is the country’s main importer of crude oil.

In 1993, China became a net oil importer for the first time. barrels per day, 4.5 percent of China's total crude oil

China's strategy is to increase domestic oil and gas output production. Until recently, all foreign activity was limited

by stabilizing production in eastern China’s mature to offshore exploration and development. Offshore China

fields, by increasing the focus on exploration and was opened to foreign investors in 1982. Since then, the

development in the western regions and by continuing to CNOOC has held four investment auctions. By 1994,

encourage offshore development. Central to this strategy foreign investment in China's offshore oil and gas

is an expansion of exploration and production joint exceeded $4 billion. Currently, there are 12 offshore oil

ventures with foreign companies. and gas fields in operation, of which four include

Thus far, China has adopted a very limited form of Group of Agip SpA, Amoco and partners, Chevron,

privatization. Most foreign activity is in production- Japan's JHN Group, Phillips Petroleum, and Texaco.

sharing contracts. Most oil and gas production comes from

onshore activity; however, until recently, most foreign Natural gas makes up only about two percent of China’s

activity had been limited to offshore exploration and domestic energy production and has long been

development. In 1993, the need to meet production targets overshadowed by the country’s coal and oil production.

led China to open up onshore areas to foreign investors However, environmental concerns have led China to

with the first of three investment auctions. recently shift its oil and gas exploration and development

Eastern China, the country's traditional producing region, CNPC plans to step up gas exploration and development

is where most of the country’s large oil and gas fields are in western China. Gas production is expected to increase

located. Oil production from eastern fields accounts for offshore since China's largest offshore gas field, Yacheng

more than 90 percent of the country's total crude oil 13-1, began producing in early 1996. In addition, the

production of 3 million barrels per day, but these aging Sichuan gas project has been proposed to develop and 170

fields are beginning to decline. rehabilitate fields in the Sichuan province, where most of

China has recently emphasized exploration and develop- field productivity.

ment expenditures in western regions, particularly in the

Xinjiang region of the northwest. Most onshore tracts By the end of 1994, China's total refining capacity had

offered to foreign investors in the three investment reached 3.4 million barrels per day, making it the fourth

171

Offshore crude oil production in 1994 averaged 130,000 172

participation with foreign partners - ACT Operating

173

emphasis towards natural gas, both on- and offshore. The

174

China’s gas is produced, in order to halt the decline in 175
Energy Information Administration/Privatization and the Globalization of Energy Markets 35

Energy Information Administration, International Energy Annual 1993, DOE/EIA-0219(93)(Washington, DC, May 1995), p. 42. 176

Energy Information Administration, Country Analysis Briefs: 1995 (Washington, DC, January 1996). 177

"Demand for Refineries is High in China," The Wall Street Journal (December 26, 1995), p. A4. 178

"Demand for Refineries is High in China,” The Wall Street Journal (December 26, 1995), p. A4. 179

"Worldwide Production,”Oil and Gas Journal (December 25, 1995), p. 41. 180

"Chinese Bureaucrats Draw the Line in South China Sea,” Petroleum Economist (July 1995), p. 16. 181

"Offshore Gas Developments Dominate Activity; Far East's Oil and Gas Industry; 50th Annual International Outlook Industry Overview," World Oil, 182

Vol. 216, No. 8 (August 1995), p. 128ff.

largest refiner in the world, after the United States, the Vietnam has tried to make the country more attractive to

FSU, and Japan. The country's refining capacity is foreign investors by various reforms in its petroleum law. 176

rising, but not fast enough to accommodate China's The country's first petroleum law was ratified in July

soaring domestic demand for refined products. Thus, 1993. This law assigns upstream and downstream

China has embarked on a major restructuring and petroleum operations to the state-owned enterprise,

expansion plan and started to encourage foreign joint Petrovietnam, founded in 1977. It also gives the company

venture participation. The focus is to modernize the the power to parcel acreage to select contractors based on

industry to international standards and to add an competitive investment auctions or other governmentadditional refining capacity of about 1.4 million barrels announced programs. Most foreign investments are in the

per day by year 2000. Beginning in the early 1990s, form of production-sharing agreements or joint ventures. 177

Sinopec led efforts to expand capacity and build new Vietnam also is directing foreign investor activity toward

“grassroots” refineries by decentralizing the refining the building of infrastructure to include refineries, gas

industry. It began to allow other Chinese oil companies, pipelines, and hydrocarbon-fueled power plants. Unlike

such as the CNPC, to build refineries. However, many former Communist economies in transition, where

government restrictions limiting market access have made uncertainty is causing lengthy delays, Vietnam has

it difficult for potential foreign investors to finalize established a stable legal and tax environment that reprojects. For example, France's Elf Aquitaine pulled out duces uncertainity and enables companies to quickly

of a proposed $2.5-billion refinery project in Shanghai at move from the initial stage of signing agreements to the

the end of 1995, while Shell has yet to reach an agreement stage of producing the fields.

with Chinese officials to build a refinery in the

Guangdong province, after seven years of negotiations. However, regional territorial disputes are an impediment 178

As a result, although many proposals have been sub- to the development of some of Vietnam's offshore petromitted by foreign companies, presently there are only two leum resources. Hydrocarbon potential off the Spratly

foreign companies with investments in China's refining Islands in the South China Sea and competition for

industry—France's TOTAL owns a 20-percent stake in a additional energy reserves recently reignited a longnortheastern Chinese refinery, while ARCO owns a stake standing feud between China and Vietnam surrounding

of 9.9 percent in the Zhenhai Refining and Petrochemical ownership of the Islands and adjacent waters. The

Company. territorial dispute arose again when China awarded an 179

Vietnam

Unlike the countries of the Former Soviet Union and

Eastern Europe, who are restructuring their mature oil

and gas industries, Vietnam is building a nascent oil and

gas industry, spurred by foreign investment. Due to this

investment, Vietnam—with virtually no hydrocarbon

production a few years ago- -produced 171,000 barrels per

day of oil in 1995. The country is already on its way to 180

becoming a major source of petroleum in the Asian-Pacific

energy market. Vietnam opened its economy to foreign

investment in 1988. However, U.S. companies did not

begin investing until 1994, when the twenty-year U.S.

trade embargo was lifted.

exploration block in the disputed waters to the U.S.

independent oil company Crestone Energy Corporation.

Later, Vietnam awarded an adjacent block to a Mobil-led

consortium. Six countries—China, Vietnam, Taiwan,

Philippines, Brunei, and Malaysia—all lay claim to this

part of the South China Sea.181

Virtually all Vietnamese exploration and production

activity occurs off Vietnam's southeastern coast. By the

end of 1994, after two licensing auctions and the signing

of 25 offshore production-sharing agreements, the number

of exploratory wells rose considerably. Most petroleum 182

production in Vietnam occurs in three fields, Bach Ho,

Rong, and Dai Hung. The Bach Ho and Rong fields are

operated by VietSovPetro, a Vietnamese-Russian joint
36 Energy Information Administration/Privatization and the Globalization of Energy Markets

"Petro Vietnam’s Ho Si Thoang Outlines Successes, Predicts Future Gas Industry,” Offshore (November 1995), p. 39. 183

"PetroVietnam’s Ho Si Thoang outlines successes, Predicts Future GasIindustry,” Offshore (November 1995), p. 39. 184

"BHP Demand for Better Oil Field Terms is Rejected,”Financial Times (May 10, 1996), p. P6. 185

"Vietnam Set to Launch Gas Industry, Exports,” The Reuter European Business Report (March 12, 1995). 186

Energy Information Administration, Country Analysis Briefs: 1995 (Washington, DC, January 1990). 187

"PetroVietnam’s Ho Si Thoang Outlines Successes, Predicts Future Gas Industry,” Offshore (November 1995), p. 39. Energy Information 188

Administration, Country Analysis Briefs: 1995 (Washington, DC, January 1995).

"PetroVietnam’s Ho Si Thoang Outlines Successes, Predicts Future Gas Industry,” Offshore (November 1995), p. 39. 189

"Discoveries, Production Add Luster to Offshore Vietnam’s Outlook,” Oil and Gas Journal (July 17, 1995), p. 17. 190

"Vietnam Names New Refinery Partners," Financial Times (January 11, 1996), p. P5. 191

Energy Information Administration, Country Analysis Briefs: 1995 (Washington, DC, January 1996). 192

"Vietnam struggles to refine policy on fuel,” Financial Times (March 26, 1996), p. P5. 193

venture. Bach Ho, the country's first and largest Another area of discovery with potential gas reserves is at

producing oil field, was discovered in 1975 by Mobil, the Hai Thach gas field. It may take a few years before

which abandoned the well when the U.S. withdrew from reserve estimates can be formulated, but if the country's

Vietnam. The well was later developed in 1986 by proven natural gas reserves are estimated between 12-35

VietSovPetro. Both the Rong and Dai Hung fields—led by trillion cubic feet, Vietnam plans to commit itself to the

a BHP consortium composed of BHP, Petronas of development of a natural gas industry for domestic use as

Malaysia, Total, Sumitomo, and the Vietnam Oil and Gas well as possible export markets. In April 1995, Vietnam

Corporation—came on line in 1994. Newly discovered commissioned a consortium comprised of BP, British Gas, 183

fields could be on line soon, raising the country's Mobil, and Mott Ewbank Preece to develop a master

production even further. For example, Petronas is national gas plan. In the meantime, Vietnam's first gas

developing its Ruby field, while Mitsubishi and Japan pipeline (built by Hyundai of Korea) went into operation

National Oil are developing the Rang Dong field, with in 1995, bringing production ashore from the Bach Ho

production in both fields to start by 1997. Other fields that field. Vietnam also is studying the possibility of

could come on line are the Flying Horse, discovered by exporting gas via pipeline to Thailand.

Lasmo; the Red Orchid and the West Orchid (both located

in disputed waters), and the Sunflower North and South Substantial upstream activity has led to Vietnam’s genFields, discovered by BP; as well as two other unnamed erating plans for downstream oil and gas infrastructure

fields, one discovered by Total and the other discovered projects. As Vietnam’s economy grows, it plans to reduce

by Shell/Pedco. These major fields are all located in the its reliance on imports by building its first oil refinery by

Nam Con Son Basin. Despite initial exploration the year 2000. Vietnam commissioned two feasibility 184

successes, geological difficulties are making it hard to studies regarding the possible construction of a 130,000

estimate recoverable reserves, raising concerns over the barrels-per-day refinery. France's TOTAL, a consortium

viability of some projects. Several fields that were member of the study, withdrew from the project over

originally thought to be quite large are now being objections concerning the chosen site, located in a

downgraded—for example, the BHP consortium's Dai remote area of central Vietnam. South Korea's LG Group,

Hung field and the Mobil consortium's Thanh Long block. Petronas of Malaysia, and Conoco were chosen to replace

Further, BHP is considering abandoning its Dai Hung TOTAL, but the companies said that no decision has been

project if new terms cannot be negotiated. made beyond a feasibility study since there are doubts 185

Several recent gas discoveries have opened up the future a second 100,000- barrels-per-day refinery after the first

of the gas industry in Vietnam. Perhaps the most signifi- plant comes on line. In the meantime, Petrovietnam has

cant activity involves two major gas field strikes in asked for bids to begin studies for a second refinery, likely

southern Vietnam drilled by British Petroleum (BP) and to be located in the northern part of the country. Despite

its partners, India's ONGC, and Norway's Statoil, with foreign involvement in upstream activities, Vietnam has

reserves estimated at a combined 2 trillion cubic feet. denied foreign investors access to its retail sector. 186

187

188

189

190

about the viability of the project. Vietnam hopes to build 191

192

193
Energy Information Administration/ Privatization and the Globalization of Energy Markets 37

"Cross-border Utility Investments: Translating Investment Risk into Global Advantage," Electricity Journal (June 1995), pp. 31-37. 194

"Project Equity Can be the Ultimate Deal," Engineering News-Record, Vol. 236, No. 14 (April 8, 1996), p. 24ff. 195

U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business (Washington, DC, August 1996), Table 18. 196

5. Privatization and the Genesis of the

Multinational Power Company

Underlying Factors and 

Regional Trends

Financial Developments in Global Power

Electric power is expected to be the fastest-growing source

of end-use energy supply throughout the world over the

next two decades. To meet global power projections, it is

estimated that over $1 trillion will have to be spent during

the next 10 years. The electric power industry has 194

undergone a substantial degree of privatization in a number of countries over the past few years. Power generation

growth is expected to be particularly strong in the rapidly

growing economies of Asia, with China leading the way

(Table 3). The reasons for electric utility privatization are

numerous and vary from country to country. Some of the

more evident reasons include the following: 

& Raising revenues for the state through asset sales has diminished significantly. However, several new

& Acquiring investment capital

& Improving managerial performance

& Moving toward market-determined prices 

& Technology transfer

& Reducing the frequency of power shortages

& Reducing the cost of electricity to consumers

through efficiency gain

& Taking advantage of creating national and regional

power grids, and 

& Re-thinking whether electric power generation in

today’s economy constitutes a natural monopoly.

Electricity demand is expected to grow fastest in the

developing nations, particularly those with rapidly

growing populations and economies. For developing

nations, privatization is one means of obtaining badly

needed foreign capital. It is also a means of transferring

western technology to second and third world countries.

Privatization of formerly state-owned electric power

assets has opened up enormous investment opportunities.

For foreign investors, investment in overseas electricity

assets offers opportunities to achieve potentially higher

returns and, in many cases, to realize greater growth

opportunities than are available at home. 

The financing of power projects around the world has

changed in recent years. Non-private sources of investment funds have grown increasingly scarce, and the

critical role such publicly-financed institutions, such as the

World Bank, have played in financing electrical projects

entrants in financing of overseas electric power

investment have recently emerged--particularly in the

area of equity finance. Some of these new sources of

capital include the world’s major petroleum companies,

natural gas pipeline companies, electric utilities, and also

some of the world’s major construction and power

equipment manufacturing companies. Construction

companies are increasingly setting up project financing

departments and committing their own capital to

financing power projects. Investors based in the United 195

States have been the leading source of capital for many of

these projects. Some U.S. mutual funds have been started

for the exclusive purpose of investing in Latin American

power production. The growth trend in U.S. direct

investment in foreign electric utilities (and similar

services) has clearly been upward in contrast to U.S. direct

investment abroad in petroleum.196
38 Energy Information Administration/ Privatization and the Globalization of Energy Markets

Table 3. New Power Plant Capacity Required 

Outside North America by 2000

(Gigawatts)

Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Eastern Europe . . . . . . . . . . . . . . . . . . . . . 15

FSU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Middle East . . . . . . . . . . . . . . . . . . . . . . . . 50

Other Asia . . . . . . . . . . . . . . . . . . . . . . . . . 50

Other Latin America . . . . . . . . . . . . . . . . . 42

Western Europe . . . . . . . . . . . . . . . . . . . . 99

World Total . . . . . . . . . . . . . . . . . . . . . . . . 545

Source: Salomon Brothers.

There are a number of ways to privatize electric power. occurred across international regions.

One involves the sale of state-owned electric power assets.

Another involves allowing less restricted or unrestricted

investment in new power assets--the independent power

project. Arrangements whereby a foreign company builds

a power unit and operates the unit for an agreed-upon

number of years before transferring ownership to the host

country has been another important vehicle for financing

electric power. This latter investment arrangement is

commonly referred to as a build, operate, transfer

agreement, or BOT. In several nations, rate reform has

also played a critical role in encouraging such non-utility

electric power investments.

In several cases discussed later in this chapter,

privatization has involved foreign utilities purchasing one

or more utilities in other countries. Some privatization

efforts have involved consortiums of foreign and domestic

companies. Joint ventures with host nation companies

have been another avenue of privatization. In other cases,

foreign companies or investors have purchased shares in

newly-privatized electric utilities. In a few cases, recentlyprivatized companies have acquired ownership interests

in other recently-privatized companies.

The Convergence of Electricity and 

Natural Gas

Privatization has also resulted in a growing convergence

of petroleum-related activities and electric power-related

activities. The growing interconnection between petroleum companies (particularly those with substantial

natural gas production and/or distribution activities) and

electric power generation stems from a number of developments. In certain regions, natural gas is becoming the

fuel of choice for new electricity generation projects, in

part, because of the relative environmental advantage that

natural gas has over coal or oil. The much improved

efficiency of gas-fired electricity generation units over the

last several years has also improved natural gas’s relative

competitiveness as a fuel for the generation of electricity.

Furthermore, in several countries natural gas deregulation

has accompanied the deregulation of electric power. In the

aftermath of several prominent deregulatory efforts in the

U.S. natural gas market--culminating in the Federal

Energy Regulatory Commission’s (FERC’s) final

deregulatory push in 1993, through the FERC Omnibus

Order 636--U.S. natural gas pipeline companies have

become particularly well-suited to enter newly-opened

markets in a variety of international regions undergoing

a deregulatory and transitional phase. The sections that

follow review developments in power generation,

transmission, and distribution privatizations as they have

Regional Developments

The privatization of electric utilities has occurred and is

continuing to occur in both developing and developed

countries. Although varying extensively in degree and

method, countries as different as India and the United

States have exposed their electric power generation

industries to greater market forces. Chile has led the way

with electric utility privatization in the late 1980's,

followed by the United Kingdom. Currently, most Latin

American countries are privatizing their electric power

industries to some extent. Prominent electric power

privatization efforts also are currently underway in

Australia, Canada, China, Scandinavian countries, India,

Indonesia, Morocco, Pakistan, the Philippines, and Eastern

Europe. A brief discussion of the different regions is

appropriate to highlight their differences and similarities

in electricity privatization.

Some countries in OECD Europe have taken steps to

introduce elements of competition in their power

industries. Others are in the process of formulating

regulatory changes that will ensure a move toward privatization and an overall restructuring of their electricity

markets. Currently, the European Union energy ministers

are working on plans to create an internal electricity

market, but progress has been slow due to resistance from

some state-owned electricity monopolies. OECD European

nations currently undergoing major privatization efforts

include the United Kingdom, Finland, Norway, Sweden,

and Portugal. These efforts vary considerably across
Energy Information Administration/ Privatization and the Globalization of Energy Markets 39

Much of the details concerning the methods and progress of privatization for the countries discussed in this report, along with forecasts of 197

regional electricity demand growth, came from: Energy Information Administration, International Energy Outlook 1995 (DOE/EIA-0484(95)) 

(Washington, DC, June 1995), pp. 73-87.

Energy Information Administration, International Energy Outlook 1995 (DOE/EIA-0484(95)) (Washington, DC, May 1995), p. 74. 198

Energy Information Administration, International Energy Outlook 1996 (DOE/EIA-0484(96)) (Washington, DC, May 1996), p. 85. 199

Energy Information Administration, International Energy Annual 1993 (DOE/EIA-0219(93)) (Washington, DC, May 1995), Tables 2.6, 2.7, 200

2.8, and 6.1.

Slaughter, Andrew, "Power Generation Key to Global Natural Gas Market," Electrical World (November 1994), p. 61. 201

countries and are for the most part still in a transitional There are several reasons for the current wave of

phase. electricity privatization in Latin America. Poor economic 197

Similarly, the shape of the electric power industry is countries with deteriorating electricity infrastructures

changing in Canada. In some jurisdictions, consideration and no increase in generation capacity despite rapid

is being given to unbundling electricity supply to its population growth.

three principal functions--generation, transmission, and

distribution. Privatization of North America’s largest Latin America’s growing economies and growing

power utility, Hydro Ontario, is also being considered, populations are expected to continue to stimulate

excluding its nuclear generating plants. expansions in electricity generation capacity well into the

Of all world regions, Asia is expected to show the most American countries experienced increased economic

rapid increase in economic growth and electricity con- growth rates. Long-term economic growth prospects

sumption over the next few decades. This region is also also improved. Future economic growth is very

expected to lead the way in the level of independent dependent on Latin America’s expanding its powerpower producers activity. While non-OECD Asia generating capacity. Expansion of access to electricity is

accounted for only 14 percent of total world electricity also important as currently 30 percent of the population

consumption in 1992, it is expected to account for nearly of Central and South America have no access to the

one-third of total demand growth between now and power grid. Forecasts of electricity demand predict a

2010. China, India, and Australia are, respectively, Asia 2.6-percent annual growth in Latin America well into the

and Oceania’s largest economies, as well as the next next century. 

largest consumers of electricity after Japan (an OECD

country). They also account for some of the largest Latin America has many primary resources that can be

foreign investments in electricity generation overseas. used to generate electricity, including water for

All three nations have undergone significant attempts at hydroelectric generation, and coal, natural gas, and oil

electricity privatization. Some of the relatively smaller for steam-fired generation. Historically, hydroelectric

economies such as Indonesia, New Zealand, Pakistan, generation has been the primary method of generating

and the Phillippines, have also undergone significant electricity in Latin America. However, new power

privatization efforts. generation projects seem to indicate a movement to

Africa, too, is undergoing changes in its electricity generation in all of Latin America was fueled by natural

industry structure. Morocco is undertaking the privati- gas. Concurrent and related to the movement to

zation of its electricity industry, much as the smaller natural gas-fired electricity generation has been

countries of Asia and Oceania. increased investment in natural gas pipelines (see the

Privatization efforts are generally sweeping Latin Pipeline Network”). 

America and the electricity industry is no exception.

Many Latin America nations have undertaken economic Electricity privatization is different, depending on the

and political reforms of historic dimensions in recent particular country on which one focuses. However,

years. Democratic government and free market some countries are more similar than others. While some

economics have been central to these reforms. Both have countries have sought aggressive privatization and

done much to restore Latin America’s creditworthiness. reform of their electric power sectors, others have been

performance during the 1980s left many Latin American

future. In the first half of the 1990's, most Latin

198

199

200

natural gas and coal. As of 1994, 30 percent of electricity

201

box “Latin America's Emerging Regional Natural Gas
40 Energy Information Administration/ Privatization and the Globalization of Energy Markets

"The Price Report; UK Electricity Industry," Petroleum Times (May 5, 1995), p. 1. 202

Latin America's Emerging Regional Natural Gas Pipeline Network

One serious problem currently facing Latin American countries is their antiquated energy infrastructure, particularly

that for natural gas transportation. This problem could grow even more acute as Latin American natural gas

consumption has been predicted to grow as much as four to five percent annually through 2005, a substantially larger

growth rate than the two-percent forecast for worldwide annual growth. Much of this growth will come from a

electricity generation expansions. Concurrently, heightened environmental concerns strengthen natural gas demand

for both power generation and other uses. The two primary Latin American destinations for natural gas shipments,

Brazil and Chile, have substantial air pollution problems.

To address these difficulties, natural gas pipeline projects costing nearly $7 billion are either under construction or

under active consideration. These proposed transportation pipeline construction projects will add more than 6,000

miles of new natural gas pipeline and will connect natural gas-producing areas in Argentina, Bolivia, Colombia, and

Peru with consumers in Brazil and Chile, and seaports for export markets. Other projects also under consideration will

connect Argentina with Paraguay and Uruguay. 

These projects offer substantial opportunities for foreign companies. Several international companies are involved in

these projects, two of which are U.S. companies--Enron and Tenneco. Both companies are engaged in several Latin

American pipeline and associated electricity generation projects. Perhaps the most significant is the construction of

the largest pipeline project in Latin America, the $1.5-billion, 2,050-mile Bolivia/Brazil pipeline. Enron will have a b

34-percent share in the Bolivian segment and an 8-percent share in the Brazilian segment. Tenneco Gas is one of the c

principals in the Brazilian segment of the Bolivia/Brazil pipeline and in a $700-million, 750-mile Argentina/Chile

pipeline. Tenneco holds a 25-percent share in each of these projects. d

The recent proliferation of regional trade accords has done much to lay the legal and commercial foundations necessary

for these natural gas transportation projects to get underway. These trade associations generally involve neighboring

countries: the Andes Group (Grupo Andino), the Southern Cone Common Market (Mercosur), and the Group of Three

Amigos. It is likely that the development of these trade associations and the rise in their significance resulted in e

sufficient cooperation to undertake such a monumental set of construction projects. Further, as the natural gas

pipelines become a reality, the pipelines will be tangible evidence of the benefits of cooperation between Latin

American countries. Thus, the cooperation that led to the pipeline projects may be strengthened further by the pipeline

projects.

 

 Energy Information Administration, International Energy Outlook 1996 (DOE/EIA-0484(96)) (Washington, DC, June 1996), p. 9. a

 "Bolivia-Brazil Gas Pipeline About to Take Off: Seen As Litmus Test for Southern Cone Gas Grid," Oil and Gas Journal (August 7, 1995), p. 39. b

 Enron Corp, 1994 Annual Report to Shareholders and Customers, p. 26. c

 Tenneco, Tenneco 1994 Annual Report to Shareholders, p. 36. d

 The Andes Group includes Bolivia, Colombia, Ecuador, Peru, and Venezuela. Mercosur includes Argentina, Brazil, Paraguay, and Uruguay. e

The Big Three includes Colombia, Mexico, and Venezuela. See "Focus on the Grupo Andino," Latin America Regional Reports (April 20, 1995),

p. 4.

slow to reform. Thus, a review of electricity privatization first, largest, and most ambitious thus far. The United

efforts on a nation-by-nation basis is provided to demon- Kingdom began to privatize its power industry in 1990

strate the differences and similarities between countries. and completed the final phase of privatization in July of

The United Kingdom

Among developed economies, the United Kingdom’s

electric utility industry privatization efforts have been the

1996. Privatization of electricity in Great Britain has 202

occurred in the context of a wholesale privatization of

several other state-owned industries. The 1980's saw

awave of privatization by the United Kingdom, beginning

in 1981, when British Aerospace was auctioned off,

followed by British Telecommunications in 1984. Soon
Energy Information Administration/ Privatization and the Globalization of Energy Markets 41

"Sale of the Century,” The Wall Street Journal (October 2, 1995), p. R17. 203

Ironically at the same time, two consortia led by National Power and Southern Company competed for power projects in Pakistan. Although 204

National Power won the bid, if Southern Co. succeeds in its merger attempt, essentially Southern wins in Pakistan as well.

"Britain to Privatize Nuclear Power Company,” The New York Times (May 29, 1996), p. D4. 205

"Southern Water of Britain Accepts Offer from 2d bidder," The New York Times (May 30, 1996), p. D5. 206

"Southern Water of Britain Accepts Offer from 2d bidder,”The New York Times (May 30, 1996), p. D5. 207

afterwards, there were privatizations of British Gas (1986) distribution stage. Through a series of mergers and

(see the box entitled “Natural Gas Privatization in the acquisitions, the twelve regional electricity distribution

United Kingdom”), British Airways (1987), British Steel companies, as a group, became more vertically integrated.

(1988), and Britain’s water utilities (1989). More recently, Both National Power and PowerGen (the two newlyBritish Coal was privatized in 1995, and British Rail in created generation companies) placed bids on distribution

1996. The sale of the Post Office is also being considered. companies. Foreign electricity companies, particularly

Also, in a series of transactions starting in 1979, the British from the United States, also placed bids on both the power

government began to sell off its ownership in British and distribution companies. 

Petroleum, culminating in the government’s sale of its

remaining 2-percent share in 1995 (see Chapter 2 for a

discussion on the privatization of British Petroleum).

Through all of 1995, the UK had raised over $95 billion

through privatization.203

Prior to privatization, in England and Wales, the

nationalized Central Electricity Generating Board (CEGB)

owned all power stations and transmission grids. On the

national level, the initial steps toward privatization

involved the restructuring of the CEGB into four separate

companies, still owned by the British government. Later,

the two power generation companies, PowerGen and

National Power, both issued equity shares in 1990.

National Power is the larger of the two companies and

accounts for nearly a quarter of UK electricity generating

capacity. The national electric transmission grid is 204

managed by the National Grid Company which was

initially owned by twelve regional electricity distribution

companies but became an independent company in 1995.

The 12 regional companies are: East Midlands Electricity,

Eastern Group, London Electricity, Manweb, Midlands

Electricity, Northern Electric, Norweb, Seeboard, Southern

Electric, South Wales Electric, South Western Electricity,

and Yorkshire Electricity. The fourth company, Nuclear

Electric, (which consists of eight nuclear-fired electricity

generating plants) was privatized in July 1996 as the

company British Energy. It should be noted that 205

privatization did not mean complete deregulation and in

the aftermath of privatization retail rates were still

regulated and wholesale rates frozen.

In Scotland, privatization involved the creation of two

integrated companies, Scottish Hydro-Electric and Scottish

Power (a distribution and generation company for

Scotland), and in Northern Ireland, Northern Ireland

Electricity was formed.

Soon after privatization, the structure of Britain’s electric

industry began to change dramatically, particularly at the

Since going public, several of the 12 regional distribution

companies and one power company have been takeover

targets (Table 4). The largest foreign acquisition of a UK

electric utility thus far has been the purchase of Midlands

Electricity (one of the regional distribution companies) by

the U.S. companies General Public Utilities and Cinergy

for $2.6 billion. The next largest involved the purchase of

another regional electricity distribution company

(Seeboard) for $2.5 billion by Central and South West of

Dallas, Texas. Southern Company, of Atlanta, Georgia

(the second largest utility in the United States), purchased

South Western Electricity, another regional electricity

distribution company, for $1.7 billion. Meanwhile,

Prudential took a 4.9-percent equity stake in Yorkshire

Electricity, yet another regional distribution company. 

There has also been some internal consolidation of Great

Britain’s electric power and distribution industries and

integration with the UK’s recently-privatized water

utilities. Both Norweb and South Wales Electricity were

acquired/merged with local water power utilities, while

Scottish Power acquired Manweb. North West Water,

which purchased Norweb, outbid the U.S. utilities

Houston Industries and Central and South West Corp. In

addition, Southern Electric outbid Scottish Power to

acquire Southern Water PLC for $2.4 billion. The UK’s 206

Southern Electric is the second largest electricity

distribution company in England and Wales. With its

acquisition of Southern Water and its recently-obtained

license to become a natural gas distributor, it could

become the first full service regional utility.207

In early 1996, there were several attempted acquisitions

which were in the end rejected by the British government.

Among recent takeover targets, those involving Britain’s

electrical power generation assets have been among the

most controversial. National Power PLC had attempted

a takeover of Southern Electric PLC, the second largest
42 Energy Information Administration/ Privatization and the Globalization of Energy Markets

"The Busiest Merger Lab: The UK Electricity Sector,” Electrical World (July 1996), p. 29. 208

"Power Play Gets Rough,” The Daily Telegraph (April 20, 1996), p. 2. 209

Enron Corp 1995, Annual Report to Shareholders and Customers, p. 1. 210

 Table 4. The Structure of the Electricity Market in the United Kingdom and

Recent Privatization-Related Transactions

(Million Dollars)

 Company Type Acquirer/Merger Partner Acquisition Value

Regional Distribution Companies

East Midlands Electricity ....................

London Electricity .........................

Yorkshire Electricity ........................ Prudential (4.9%) (U.S.) NA

Northern Electric .......................... Failed Bid by Trafalgar House 

Eastern Group ........................... Hanson (UK) $4.0 billion 

Southern Electric .......................... Southern Water $2.4 billion 

Midlands Electricity ........................ General Pubic Utilities & Cinergy (U.S.) $2.6 billion 

Manweb ................................. Scottish Power (UK) $1.7 billion 

South Western Electricity ................... Southern Company (U.S.) $1.7 billion 

Seeboard ................................ Central and South West (U.S.) $2.5 billion 

Norweb ................................. North West Water (UK) $2.7 billion 

South Wales Electricity ..................... Welsh Water (UK) $1.3 billion 

Power Companies

National Power (P) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

PowerGen (P) ............................... 

Northern Ireland Power Plant, Kilroot .............. NIGEN (AES/Tractabel JV)

(U.S./Belgian) $343 million 

Northern Ireland Power Plant, Belfast ............. NIGEN $101 million 

Northern Ireland Power Plant, ................... British Gas

Ballylumford ................................. $270 million 

NA=Not available.

Sources: European Power, McGraw-Hill’s Independent Power Report, Financial Times, various issues. 

regional distribution company in the United Kingdom, for Meanwhile, Hanson Corporation’s electric distribution

$4.4 billion. In turn, National Power was a takeover subsidiary, Eastern Group, has purchased power plants 208

target of the U.S.-based Southern Company, which had from both National Power and PowerGen, making the

just earlier purchased South Western Electricity. Eastern Group an integrated electricity company. (Hanson

PowerGen, the other major generation company, had Corporation is a UK-based conglomerate with interests in

mounted a takeover attempt of Midlands Electricity. U.S. and Australian coal mining.) The Eastern Group is

However, the British government blocked the proposed the largest regional distribution company in the UK and

merger of Southern Electric and National Power, and the accounts for roughly 10 percent of the national electricity

purchase of Midlands Electricity by PowerGen because of distribution market.

concerns about maintaining competitive markets. Had the

Southern Company/National Power merger and the

National Power/Southern Electric acquisition gone

through, Southern Company would have owned two of

the twelve regional distribution companies (with

neighboring territories) along with the largest generation

company. A U.S. company would then have become 209

both the largest power generation company and the

largest power distribution company in the United

Kingdom.

Independent Power Producers

There have also been several independent power investments in England and Wales in recent years involving

both U.S. and other foreign investors (Table 5). These

include an investment by Enron in 1991 in the 1,875-

megawatt (MW) Teesside power facility, the largest gasfired plant in the world. Other independent electric 210

power generation investments include: an investment by
Energy Information Administration/ Privatization and the Globalization of Energy Markets 43

"NI Customers Empowered,” Financial Times (February 9, 1996). 211

Energy Information Administration, Office of Energy Markets and End Use, International Data Base, June 1994. 212

Energy Information Administration, Office of Energy Markets and End Use, International Data Base, June 1994. 213

Energy Information Administration, Office of Energy Markets and End Use, International Data Base, June 1994. 214

Table 5. Major Foreign Equity Investments in UK Independent Power Projects

Project Site MW Share Completion Involved

Total Project Cost Equity Year of Company/Companies 

(million dollars)

Teesside .......... 1,875 1,440 50 1991 Enron

Medway . . . . . . . . . . . 660 650 38 1992 Seeboarda

38 AES

Brigg South ........ 240 221 25 1992 IVO (Finland)

Derwent . . . . . . . . . . . 214 240 33 1992 Mission Energy

Humber Power . . . . . . 750 780 30 1994 IVO

25 Tomen

20 ABB

Seeboard is a subsidiary of the U.S. utility Central and South West Corp. a

MW = Megawatts.

Source: Cambridge Energy Research Associates Central and South West (Seeboard’s parent company) and AES, both of which

are in the United States, in a 660-MW natural gas-fired power plant. Also, Southern California Edison’s (SCE Corp) affiliate Mission

Energy acquired First Hydro Company and its Derwent power project. 

Central and South West (Seeboard’s parent company) and As a result of such concerns, during its initial offering, the

AES, both of which are in the United States, in a 660-MW $2.1 billion value the market placed on British Energy

natural gas-fired power plant. Also, Southern California proved even less than the cost of building its last nuclear

Edison’s (SCE Corp.) affiliate Mission Energy acquired power plant. Further, since the flotation of shares, the

First Hdro Company and its Derwent power project. market value has dropped even further. In addition to

There have also been some foreign investments in costs of British Energy has raised doubts over the com

Northern Ireland following the auction of all power pany’s ability to compete--particularly in the new

stations to private companies in March 1992. Two coal- competitive free market atmosphere.

fired plants were bought by NIGEN, a consortium of the

U.S. company AES and the Belgian company Tractabel. In

addition, British Gas bought an oil-fired plant.211

Nuclear Power Privatization

One of the more controversial aspects of electricity

privatization in the United Kingdom concerned the

governments sale of nuclear power plants. Nuclear power

privatization has been a controversial issue in several

other countries, in addition to Britain, most notably in

Argentina and in Canada. In July 1996, eight of Britain’s

nuclear power plants were consolidated into one

company, British Energy, and then sold off to the public.

The privatization of British Energy results in the first

publicly-traded company whose entire asset base consists

of nuclear power facilities. An earlier attempt at

privatization of Britain’s nuclear power industry was

made in 1990. However, that attempt failed largely as a

result of the financial communities’ concerns over the

safety and liability of nuclear power plants.

safety and liability concerns, the relatively high operating

Natural Gas Privatization in the 

United Kingdom

The privatization of the British natural gas industry is

both coincident to and strongly related to the privatization

of electricity in the United Kingdom. The recent convergence of Britain’s electric and natural gas industries has

drawn a significant amount of attention from abroad as a

possible paradigm of what might result in other countries

from totally privatized energy markets.

Natural gas plays an important and growing role in UK

energy supply. Between 1989 and 1994, coal production

in the United Kingdom had fallen by half, while natural

gas production increased 56 percent. Since 1970, the 212

UK’s production of natural gas has grown sixfold. Con- 213

sumption patterns of both fuels has largely paralled

demand. Between 1989 and 1994, natural gas

consumption in the United Kingdom has risen 31 percent,

while coal consumption has fallen by 44 percent.214
44 Energy Information Administration/ Privatization and the Globalization of Energy Markets

"Players Line up in Scramble for U.K. Natural Gas Markets,”Oil and Gas Journal (July 24, 1995), p. 12. 215

"Players Line up in Scramble for U.K. Natural Gas Markets,” Oil and Gas Journal (July 24, 1995), p. 12. 216

WEFA Energy’s European Gas Service, The Public Distribution Sector, A Special Study on Gas Sales to the High Value Domestic and 217

Commercial Sectors (January 1996), p. 7.3.

Britain’s move away from coal-fired power towards the Act, the UK initiated a free market experiment in

natural gas power is the result of the rapidly changing natural gas distribution by allowing a half million

prospects for both industries in the United Kingdom (See residential and small business consumers in three

Chapter 6, Recent Trends in International Investment and southwestern counties to choose their natural gas supTrade in Coal). The closure of uneconomic coal mines in pliers. Previously, the sole supplier of natural gas to

the United Kingdom is coinciding with the increasingly these markets had been British Gas. This pilot program is

available natural gas supplies that have come onstream designed to provide a test ground for the eventual

from fields in the North Sea. deregulation of the entire natural gas market in the UK,

Environmental concerns have also promoted the switch to had licensed 10 companies to supply natural gas in the

gas as coal burning has long been a major contributant to pilot area. The nature of these companies’ operations

air pollution in the United Kingdom. Ironically, Britain’s suggests how dramatically the natural gas industry in the

natural gas industry’s beginnings stem from Britain’s UK is evolving.

early abundance of coal resources from which town gas

was manufactured. A network of essentially privately- Included in the ten companies awarded licenses are

owned local gas operations was nationalized in 1948, several U.S. electric utilities and petroleum companies

when the state-owned monopoly British Gas Corporation from the United States, Norway, France, as well as from

was created as a vertically-integrated company. However, the United Kingdom (Table 6). These companies also

British Gas was not a major producer of natural gas until include some of the UK’s recently-privatized regional

the late 1970's, when North Sea production came electrical companies and PowerGen, one of the two

onstream. Subsequently, British Gas came to represent the recently-privatized power generation companies.

gas industry.

Great Britain started to privatize its natural gas industry opened natural gas distribution business have all substan10 years ago--shortly after passage of the Natural Gas Act tial North Sea natural gas operations. The primary

of 1986, which resulted in the selloff of British Gas by the purpose of obtaining these licenses is to integrate their

UK government. In addition to privatization, the Natural upstream North Sea operations with downstream

Gas Act required that British Gas’ transmission pipelines residential natural gas demand in the UK. Amerada Hess,

provide open access for all sellers of gas. However, the Amoco, Conoco (DuPont), Phillips, and Texaco of the

privatization of British Gas did not result in immediate United States, Statoil and Norsk Hydro of Norway, and

unbridled competition. Rates still remain controlled by a TOTAL of France have all obtained licenses or conditional

natural gas regulatory body, the British Office of Gas licenses to market natural gas in the newly-opened reSupply (Ofgas). Essentially, Britain has gradually gions. 

introduced free markets in natural gas in three stages. In

late 1986, the first stage involved allowing large users of A number of electric utility companies (both from the UK

natural gas (over 25,000 therms a year) to seek alternative as well as from the U.S.) have also set up subsidiaries in

sources of supply. These users consisted largely of the newly-deregulated regions. This may eventually result 215

Britain’s industrial users of natural gas. Next, in August in the creation of a residential energy utility industry in

1992, users of natural gas in excess of 2,500 therms the UK with a variety of single service and mixed service

(primarily commercial demand) were allowed to bypass companies. This would be a marked difference from the

British Gas in favor of other suppliers. Both actions greatly structure of Britain’s electric power and natural gas

diminished British Gas’s share in the market for industrial distribution structures in the past, when two single

and commercial uses. The final stage of privatization is companies (the Central Electricity Generating Board and

currently being implemented and is creating a very British Gas) were the primary providers of these services.

different natural gas industry in Britain.

The newly-enacted Gas Act of 1995 introduced compe- companies are subsidiaries of the current twelve regional

tition into the residential gas market. Following passage of electric distribution utilities--and are, in some cases, 

216

scheduled to take place in 1998. As of April of 1996, Ofgas

The petroleum companies entering the UK’s newly217

Several of the newly-created natural gas distribution
Energy Information Administration/ Privatization and the Globalization of Energy Markets 45

Calor is a major marketer of liquefied petroleum gases in the United Kingdom. 218

"The Break-up of British Gas: Setting up Defense of the Domestic Realm--British Gas Energy," Financial Times (February 7, 1996), p. 22. 219

"The Break-up of British Gas: Setting up Defense of the Domestic Realm--British Gas Energy," Financial Times (February 7, 1996), p. 22. 220

British Gas, Annual Report and Accounts 1995, pp. 3-18. 221

Table 6. Major UK Regional Natural Gas Pipeline Privatizations

Recent Natural Gas

Distribution License Applicants Owner/Nationality

Secured Licenses

Amerada Hess Ltd. .................................. Amerada Hess (U.S.)

British Fuels Gas .................................... Former Subsidiary of British Coal

Eastern Natural Gas Ltd. .............................. Eastern Group (Hanson) (UK)

British Gas Trading Ltd. .............................. British Gas (UK)

London Total Energy Company ........................ London Electricity/Total Petroleum (UK/France)

Gas UK ........................................... Northern Electric (UK)

Norweb Gas Ltd. .................................... Norweb (UK)

Southern and Phillips Gas Ltd. ......................... Southern Electric/Phillips Petroleum (UK/U.S.)

Calortex ........................................... Calor/Texaco (UK/U.S.)

SWEB Gas ......................................... South Western Electricity & Utilicorp (UK/U.S.) a

Conditional Licenses

Alliance Gas ........................................ British Petroleum/Statoil & Norsk Hydro (UK/Norway)

Kinetica ........................................... PowerGen/Conoco (UK/U.S.)

Southern Gas ...................................... Amoco/Seeboard (U.S./U.S.& UK) b

 South Western Electricity is a subsidiary of U.S. utility Southern Company. a

 Seeboard is a subsidiary of the U.S. utility Central & South West. b

 Source: Power Europe, various issues.

foreign-owned. London Electricity, the Eastern Group, market. Greater competition spurred British Gas to

Northern Electric, Norweb, Southern Electric, and South reorganize. In 1994, British Gas split itself in two

Western Electricity have all created natural gas distribu- separated businesses. Transco, by far the larger of British

tion subsidiaries. One former coal company, British Fuels Gas’ two newly-created businesses, consists of British Gas’

Gas Ltd. (a former subsidiary of British Coal), has also former natural gas transport and storage business,

obtained a natural gas distribution license, as has Calor exploration and production business, and the overseas

through its joint venture with Texaco. business. The other newly-created business, British Gas 218

An additional three companies have been granted condi- customers, the Morecambe Bay gas fields (which contain

tional licenses: Alliance Gas (a joint venture between 4.5 trillion cubic meters of gas and account for most of

British Petroleum and two Norwegian companies), British Gas Energy’s assets ), and the service and retail

Kinetica (controlled by PowerGen and Conoco UK), and gas business. 

Southern Gas (controlled by Amoco and Seeboard).

The privatization of the UK’s natural gas industry has also In 1995, British Gas merged purchased shares in NGC

involved the privatization of the former gas monopoly, Corporation, a major purchaser, marketer, and transporter

British Gas. Privatization of British Gas has had a major of natural gas in North America. British Gas is currently

impact on the structure of Britain’s natural gas industry building pipelines in South America and planning natural

and on the structure and operating performance of British gas distribution facilities in India and Thailand. British

Gas. One facet of the 1986 Natural Gas Act allowed Gas is also pursuing natural gas transmission and

independent producers to market gas, which resulted in distribution, and electrical power opportunities in

a greatly reduced British Gas share of the U.K. natural gas Indonesia, Pakistan, the Philippines, and Vietnam.

219

Energy, consists of the domestic supply arm for 19 million

220

British Gas has subsequently looked overseas for growth.

221
46 Energy Information Administration/ Privatization and the Globalization of Energy Markets

"Pressure Rises As British Gas Puts Government in the Dock," The Times (July 26, 1996). 222

"Norwegian Utility Buys Shares in Swedish Nuclear Operator," Nuclear Week (April 18, 1996), p. 8. 223

"StatKraft Snaps up 8% Sydkraft Stake in Nordic Consolidation," European Energy Report (April 12, 1996). 224

"Sweden Industry: Foreign Interest in Energy Firms Heats Up," EIU ViewsWire (May 23, 1996). 225

"EdF Preussen Elecktra and IVO Swoop in Raids on Swedish Utility," European Energy Report (April 26, 1996). 226

"Sweden Industry: Foreign Interest in Energy Firms Heats Up,” EIU ViewsWire (May 23, 1996). 227

British Gas’ experience with privatization in many ways Germany’s Preussen Elecktra acquired a 12-percent

resembles the experience that a number of natural gas share. Graninge is Sweden’s sixth largest power

transportation companies have undergone as a result of producer. Imatran Voima (IVO), the state-owned Finish

deregulation in the United States. For instance, com- power company, acquired a 50-percent share of

pounding British Gas’s introduction to market forces has Gullspangs Fraft, another Swedish utility.

been the burden of “take-or-pay” contracts. Prior to its 222

privatization in 1986, British Gas entered into a number of In Finland, electricity legislation took effect for the first

long-term contracts with North Sea producers--agreeing time in June 1995, removing licensing requirements for

to set prices for 25-30 years. However, in the meantime, an power plant construction, power sales to ultimate

oversupply of North Sea gas, coupled with the entree of customers, and imports and exports of electricity.

new competition, put downward pressure on domestic Mandated transmission access and unbundling of various

natural gas prices in the United Kingdom. As a functional activities were also required under the

consequence, British Gas is operating under the burden of legislation. A regulatory body will be established for

having accumulated several billion dollars worth of take- oversight of the transmission network. The Finnish

or-pay liabilities. government also announced that it is considering the

Finland, Norway, and Sweden

In Scandinavia, substantial progress in privatizing

electricity has occurred and the beginnings of an interregional electricity market are currently underway. Thus

far, Finland and Sweden have agreed to the creation of a

broad electricity market encompassing all of the

Scandinavian countries.

After the United Kingdom, Norway has been the most

aggressive of the European countries in introducing

competition into electricity markets. Norway deregulated

its electricity markets in 1991 and 1992. The 1990

Norwegian Energy Act, which became effective in

January 1991, calls for increased competition in the production and sale of electricity. It also allows consumers to

select their suppliers. Statkraft, the state power company,

was divided into two independent government-owned

companies; a production company (Statkraft SF) and a

transmission company (Statnett SF). Since privatization,

there have been some regional mergers in Scandinavian

electricity. In April of 1996, Norway’s Statkraft bought

into Sweden’s Sydkraft for $179 million.223

Sweden is moving toward competitive generation and

distribution markets at local, regional, and national

networks. Several foreign investors have shown an

interest in acquiring Sweden’s electricity assets.

In addition to the Statkraft purchase, France’s Electricity

de France acquired a 25-percent stake in Graninge, and

224

225

226

privatization of the state-owned utility IVO. IVO has

become active in several cross-border electricity investments. In addition to its Swedish investment, IVO has also

invested in independent power projects in the United

Kingdom.

France, Italy, and Portugal

Electricity privatization efforts have been meager in

France relative to other European countries. Electricity

generation, transmission, and distribution is dominated

by Electricity de France (EdF), the state-owned electricity

monopoly. Electricity de France is Europe’s largest

electricity company and nuclear power producer.

(Nuclear power accounts for three quarters of France’s

electricity generation.) A French government commission

recently made some recommendations which would have

lessened the dominant role of EdF in electricity; however,

there appears to be little chance of any far-reaching

reform. Although privatization of EdF seems unlikely,

EdF has become a major investor in several independent

power projects overseas. EdF has recent power project

investments in Hungary, Spain, the Ivory Coast,

Argentina, Portugal, Italy, and Poland. In May 1996, EdF

purchased a 25-percent interest in the Swedish power

company, Graninge.227

Italy is preparing for the privatization of its state-owned

electric utility, Ente Nazionale per l’Elergia Eletrica

(ENEL). The plans call for splitting ENEL into separate

companies, one for transmission and one for distribution

activities.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 47

"World Power Service," Western European Power Report, WEFA Energy, p. 14.3. 228

PowerGen PLC, Report and Accounts 1995, p. 10. 229

International Association for Energy Economists Newsletter (Winter 1996), p. 26. 230

"International Privatization: Weighing the Risk of Build versus Buy," Electrical World (November 1995), p. 25. 231

"Power & Energy: Hungary," EIU Business Eastern Europe, (January 1, 1996). 232

Bennett, Neil, "PowerGen goes to Hungary," The Sunday Telegraph Limited (June 30, 1996), p. 2ff. 233

"European Market Transition,” Independent Energy (December, 1995), p. 47. 234

"Mixed Progress for Polish Power as World Bank Arrives," East European Energy Report (May 22, 1995). 235

Holdstock, Graham, "Australia’s Painful Transition,” International Herald Tribune (September 25, 1995). 236

In 1994, Portugal began to implement a process that winning bidders. PowerGen was the first company to

would liberalize and eventually partially privatize the purchase an independent power producer in Hungary

nation’s electric utility industry. Portugal recently and Tenneco is currently negotiating an independent

separated its state-owned utility, Electricode de Portugal, power producer purchase.

into three separate companies for the generation, transmission, and distribution of electricity. However, the Poland has disaggregated its power sector and now

intended privatization is targeted to encourage indi- allows competition among independent generation

viduals and institutional investors to purchase shares of companies. However, the power generation market is

electricity companies rather than to encourage wholesale still subject to a variety of regulatory requirements.

purchases by other energy companies. Since liberali- Also, independent transmission and distribution 228

zation, a consortium led by National Power of the UK, companies have been created that operate separately

along with Endesa of Spain, EdF de France, and the U.S. from generating companies. Privatization of electricity

construction firm Morrison-Knudsen, has purchased a generation and distribution is also being considered,

power station. PowerGen and Siemens of Germany have although the government plans to maintain 51-percent

acquired a stake in Turbogas “to design, build, own, and ownership of the transmission grid. Thus far, Electricity

operate a 990 MW combined cycle gas turbine power de France has invested in a 450-megawatt coal-fired

plant.” plant in Krakow, Poland. 229

Hungary, Poland, Russia, and the 

Czech Republic 

The traditional electricity industries in Eastern Europe company, and plans have been made to privatize

(Bulgaria, Czech Republic, Hungary, Poland, Romania, regional distribution companies.

and Slovakia) are vertically integrated monopolies controlled by central governments, but reforms have started

in some countries with respect to structure, ownership,

and regulation. Countries where reform has been initiated include Hungary, Poland, Russia, and the Czech

Republic. Reforms are considered necessary by some

nations to ensure the availability of foreign funds needed

to upgrade and expand the power industry. 

Among Eastern European nations, Hungary has adopted

the most ambitious privatization program for its electrical utility industry. In 1991, the state-owned electricity

company was converted to a corporation (MVR). MVR

became a holding company for six regional power

distribution companies. Subsequently, Hungary sold 230

the six power distribution companies and all generation

assets, except for nuclear power and the transmission

grid. Several major foreign companies bid for 231

ownership of these companies, although Powerfin, a unit

of the Belgium company Tractebel, a consortium of

German firms, and Electricity de France were the

232

233

234

235

Russia began a decentralization program in 1993 that

will allow 75 percent of its generating capacity to be

under the responsibility of the regional power companies

and their regulatory bodies. The Czech Republic is

privatizing its national generation and transmission

Australia

Through a reform process that was initiated in 1991, the

Australian government committed itself to a completely

competitive power market by 1999, encompassing the

development of independent interstate transmission

networks and competitive power generation. The

impetus for utility reform came from the Australian

National Commission, which saw considerable benefits

from the privatization of state-owned utilities. This Commission recommended that ending scores of monopolies

would substantially increase national output and

employment, while reducing electricity prices and

restraining overall inflation.236

Until recently, almost all electricity companies in

Australia were owned by state governments. Thus far,

the state of Victoria (Australia’s second most populous

state) has been the most aggressive of the state
48 Energy Information Administration/ Privatization and the Globalization of Energy Markets

"Oregon-based PacifiCorp to Buy Australian Utility," Associated Press (November 16, 1995). 237

West, Gary, "Australia’s Biggest Asset Sell-Off Powers On," The Reuter Asia-Pacific Business Report (November 19, 1995). 238

Utilicorp’s ownership interest was $258 million. See "Utilicorp Says Earnings of Australian Electricity Operations Exceed Expectations," 239

Business Wire (May 15, 1996).

"T.U. Beats out PG&E and PacifiCorp for Eastern Energy of Australia," Electric Utility Week (November 13, 1995), p. 15. 240

"PacifiCorp to Purchase Australian Distributor Powercor for $1.6 billion,” Electric Utility Week (November 20, 1995), p. 15. 241

Fortnightly (May 1, 1996), p. 7. 242

"Australian Privatization: Shaken But Not Stirred,” Power Asia (April 1, 1996). 243

"PowerGen Beats U.S. Utility Affiliates Vying for 1,450 MW Plant in Australia,” Electric Utility Week (March 11, 1996), p. 15.. 244

"Victoria’s Powercor Falls into American Utility Hands” Power Asia (November 27, 1995). 245

"NSP Unit, Transfield Sign 180-MW Power Sales Pact in Australia,” Electric Utility Week (January 8, 1996), p. 18. 246

The San Diego Union-Tribune (February 25, 1995), p. C-1. 247

These investor companies are: Cogentrix, Bechtel, AES Corp, CMS Energy Corp, Enron, Enserch, General Electric Company, GVK USA, 248

Houston Industrial, Solarex, and Spectrum Corporation. 

CMS Energy Corporation, 1995 Form 10-K, p. 15. 249

governments in privatizing its state-owned energy There have also been some privatization efforts outside of

industries. In 1995, Victoria began to privatize its electric Victoria. Northern States Power (of the United States)

power industry, in part in a manner modeled after the purchased a 37-percent equity stake for its services in

British electric industry privatization program. Prior to rehabilitating and operating the 1,680-megawatt

privatization, the Victoria state government merged 29 Gladstone Plant in Queensland. SCE Corporation (also

electricity distribution companies into five companies, of the United States), through its Mission Energy

while splitting the state generating company into five Corporation subsidiary, plans to build a $111-million

enterprises, each with a power station. power plant in western Australia. Japan’s Sithe Energies

The year 1995 saw the first wave of privatization of

Victoria’s electric power industry. That year, Victoria sold

off all of their electric power distribution companies,237

raising $6.7 billion in the process. All were purchased 238

(at least in part) by U.S. companies (Table 7). Victoria’s

power generation facilities are due to be privatized in

1996. For some of the U.S. companies involved, these

Australian purchases constituted their first overseas

investments. The first sale involved Utilicorp’s 49.9-

percent purchase of United Energy (Utilicorp’s Australian

partners were Australian Mutual Provident Society and

the State Authorities Superannuation Board) for $1.2

billion. The next purchase involved General Public 239

Utilities, purchasing fifty percent of Solaris Power for $713

million, plus an additional $110 million in franchise fees.240

Subsequent transactions included Texas Utilities’

purchase of Eastern Energy for $1.6 billion, PacifiCorp’s

purchase of Powercor for $1.6 billion, and Entergy’s 241

purchase of CitiPower, Ltd., for $1.2 billion.242

In 1996, Victoria initiated the privatization of its power

generation industry. PowerGen of the United Kingdom

(itself a recently privatized electricity generation company) won its bid for the Yallourn power generation

facility for $1.8 billion. The Yallourn plant supplies 243

roughly one-quarter of Victoria’s electricity. Mission 244

Energy of the United States later purchased the Loy Yang

power plant for $1 billion.245

246

247

is constructing Australia’s largest cogeneration plant, a

175-megawatt gas-fired plant near Sydney. The

Australian government sold the Moomba/Sydney natural

gas transmission pipeline to Australia Gas and Light (51

percent) and Nova Corp of Canada and Petronas of

Malaysia (49 percent) for $535 million. 

India

India’s power sector is moving toward allowing 100-

percent foreign ownership of generating plants. The

Indian government is counting on independent producers

to expand electricity capacity to meet desired targets by

the end of the century. Annual growth in electricity

demand in India is expected to average about 8 to 10

percent for the rest of the 1990s. 

The central government has thus far opened up eight

power plants to foreign investors. Several of these plants

will be owned by U.S. investors. During 1995, CMS 248

Generation (a subsidiary of CMS Energy, both based in

the United States) invested approximately $11 million in

GVK Industries, the developer of a 235-megawatt

gas/naptha-fired plant under construction in the state of

Andhra Pradesh. CMS Generation has a total equity

commitment to the project of approximately $20 million,

representing a 25-percent ownership interest. AES is 249
Energy Information Administration/ Privatization and the Globalization of Energy Markets 49

U.S. Department of Energy, Office of Oil and Natural Gas Policy. 250

U.S. Department of Energy, Office of Oil and Natural Gas Policy. 251

U.S. Department of Energy, Office of Oil and Natural Gas Policy. 252

U.S. Department of Energy, Office of Oil and Natural Gas Policy. 253

"Wattage to India,” The Washington Post (February 5, 1996), p. A12. 254

Table 7. Australian Electric Utility Privatization-Related Mergers, Acquisitions, and IPP’s

(U.S. Dollars)

Australian Electricity Assets Acquirer/Merger Partner (Nationality) Value

Regional Generation Companies

Yallourn Energy, Victoria ................................. a PowerGen (UK) $1.8 billion

Loy Yang, Victoria ....................................... Mission Energy (SCE Corp) (U.S.) $1.0 billion

Queensland Power, Queensland ........................... Northern States Power (U.S.) $1.7 billion

Independent Power Production

175 MW/Sydney gas-fired Plant ............................ Sithe Energies (U.S./Japan) $143 million

116 MW cogeneration plant Perth .......................... b Mission Energy (SCE Corp) (U.S.) $111 million

British Petroleum (UK

Regional Distribution Companies

(Victoria) ...............................................

United Energy .......................................... Utilicorp (U.S.) $1.2 billion

Solaris Power ........................................... General Public Utilities (U.S.) $824 million

Eastern Energy ......................................... Texas Utilities (U.S.) $1.6 billion

PowerCor .............................................. PacifiCorp (U.S.) $1.6 billion

CitiPower .............................................. Entergy (U.S.) $1.2 billion

Transmission Companies

Queensland Pipelines .................................... PG&E (U.S.) $128 million

Moomba Sydney Pipeline ................................. Nova Corp (Canada) Petronas $262 million

(Malaysia)

 PowerGen took a 49.9 percent stake. PowerGen’s partners include the Australian Mutual Provident Society (26 percent), the New a

South Wales State SuperCorp. (8 percent), Hastings Funds Management (5.7 percent), and Itochu, a Japanese trading house (10.4

percent). Bidding on this asset were several U.S. companies, including: American Electric Power, Central and South West, CMS

Energy, Duke Power, New York State Power, and Northern States Power. National Power, of the UK, was also a bidder.

 The Perth cogeneration plant is a 50/50 joint venture between SCE Corp and British Petroleum. b

 Source: Power Asia, various issues.

building a $633-million, 420-megawatt coal-fired power the potential conflicts that might arise between foreign

project in Orissa. Bechtel signed a Memorandum of investors and host governments. In 1995, a newly-elected 250

Understanding for a joint venture with an Indian nationalist Maharashtra state government decided to

company to develop up to 1,000-megawatt of renewable cancel a $2.8-billion power plant developed by the Enron

energy capacity by the year 2000. Cogentrix signed an Corporation after Enron and its partners (Bechtel 251

agreement for the purchase of electricity. Houston Enterprises and the General Electric Company) had

Industries is close to completing a deal to develop a 45- already spent $300 million. The newly-elected governmegawatt power plant in India. The company is already ment alledged that the previous government had secretly

developing a $700 million 500-megawatt coal-firedplant. negotiated the contract with Enron under terms that 252

Enserch signed a Memorandum of Understanding for a favored Enron and disadvantaged consumers. The

$450-million, combined cycle power plant in Kerala. cancellation had the effect of jeopardizing the credibility 253

Recently, a widely-publicized dispute between Enron and succesfully renegotiated a deal with the state government

the Indian state government of Maharashtra underscored in early 1996, which called for a reduction in electricity 

of India’s economic reform program. Enron later 254
50 Energy Information Administration/ Privatization and the Globalization of Energy Markets

"Business Brightens for Solar Power Manufacturer Solarex,” Associated Press (April 23, 1996). 255

Energy Information Administration, Country Energy Profile, Pakistan (September 1994) 256

Energy Information Administration, Country Energy Profile, Pakistan (September 1994). 257

Energy Information Administration, Country Energy Profile, Pakistan (September 1994). 258

Uch Project on a Knife Edge,” Power Asia (October 30, 1995). 259

AES Corporation, 1995 Annual Report, p. 3. 260

Enron Corp, 1995 Annual Report, p. 26. 261

"Coastal Subsidiary’s Joint-Venture Opens Power Plant in China,” Business Wire (December 12, 1995). 262

"Enserch, Two Partners Sign Deal for 36-MW Power Plant in China,” Independent Power Report (March 10, 1995), p. 12. 263

"IES Makes Investment in New Zealand Companies,” PR Newswire (October 3, 1995). 264

Utilicorp, 1995 Annual Report, p. 43. 265

rates and allowed the project to proceed. Enron and its Enron and Bechtel is in the financing stage. Other recent

solar joint venture partner, Amoco’s Solarex, are also in foreign energy investments in Pakistan include several

the planning stage of a $100-million 50-megawatt solar renewable projects, such as wind power, solar, and hydro.

power plant to be built in Rajasthan.255

Pakistan

Pakistan’s five-year plan (1993-1998) called for $10.5

billion in electric power generation investment.256

Pakistan faces enormous new electricity generation capacity needs. To meet its growing power needs, Pakistan has

actively encouraged investment to build private sector

power plants. Pakistan also plans to privatize its stateowned electric utilities. In addition, the Pakistani 257

government is encouraging build-operate-transfer (BOT)

agreements, both for new power projects and for some of

the thermal power stations managed by the country’s

major utility. The first major project involving foreign

investment is the 1,292-megawatt Hub Power Company

plant. Hub is due to be completed in 1997. A consortium 258

of domestic and foreign companies have provided

funding for Hub Power, prominent among them are

National Power (of the United Kingdom), which took a 25-

percent share; Xenel (of Saudi Arabia), which took a 15-

percent share; and Entergy (of the United States), which

took a 10-percent share.

Pakistan is benefiting from World Bank financing through

a BOT scheme to develop another major electricity project,

the Hab River project, which will consist of four oil-fired

323-megawatt units. A consortium of domestic and

international companies has provided the financing for

Hab River led by the recently-privatized electric utility

Midlands Electricity PLC, of the United Kingdom.259

By 1966, Pakistan had reached financial closure on at least

10 independent power projects. Foreign investors involved in these projects include AES Corp (of the U.S.),

Tomen (of Japan), Japan Power Generation, and Southern

Electric Power (of the United Kingdom). AES raised $560

million in financing and began construction on two 337-

megawatt oil-fired power plants in Pakistan. In 260

addition, a joint venture oil-fired power plant between

261

China, New Zealand, Indonesia, the 

Phillippines, and Morocco

Between 1990 and 2010, China is expected to almost triple

its consumption of electricity. China recently opened its

power sector to foreign investment. Several joint ventures

have already been established for the construction of

electric generating units. China is modifying its legal

framework to allow the possibility of full foreign

ownership of power plants. In at least one project a buildownership-transfer financing arrangement is being tested.

Coastal constructed a 40-megawatt power plant in Wuxi

City and began construction on a 76-megawatt power

plant in Suzhou, and plans a 72-megawatt plant in

Nanjing. Enserch reached an agreement to cooperatively 262

develop and operate a 36-megawatt coal-fired plant near

Zhejiang.263

New Zealand started to privatize its electric power

industry in 1987, in the midst of an ambitious attempt to

transform the economy to a greater free-market economy.

A transmission corporation was created in 1993, and

monopolies in local distribution and retailing were

eliminated. In 1995, the New Zealand government issued

a new electricity policy designed to create a competitive

power market. The policy puts a limit on how much new

capacity the state-owned Electricity Corporation of New

Zealand (ECNZ) can build in the future, requiring at least

1.5 gigawatts of new capacity to be built by the sector over

the next few years. In January 1996, ECNZ was split into

two companies, with ECNZ retaining most of its power

generation. Over the past few years, a number of New

Zealand’s electric utilities have been purchased by U.S.

utilities. IES Industries took a minority interest in Powerco

Limited and Central Power Limited. Further, Utilicorp 264

purchased 20 percent of the common stock in Power New

Zealand, New Zealand’s second largest electric 265

distribution company.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 51

WEFA Energy, World Power Service, Far East Report, p. 4.6. 266

WEFA Energy, World Power Service, Far East Report, p. 4.7. 267

U.S. Department of Energy, Office of Oil and Natural Gas Policy. 268

"Eximbank and Opic Fund Phillippines Geothermal Energy Plant," International Trade Finance (August 26, 1994). 269

"Globalization of the Electric Power Industry: Risks and Opportunities," Electrical World (January 1995), p. 40. 270

"ABB, U.S.’s CMS Sign $1.6 Billion Morocco Electricity Franchise Deal," AFX News (April 26, 1996). 271

"Globalization of the Electric Power Industry: Risks and Opportunities," Electrical World (January 1995), p. 40. 272

This sale is expected to generate $1.8 billion. See "Argentina: Yacyreta Privatization Plan Causes Controversy." Inter Press Service (January 273

11, 1996).

Javetski, John, "International Privatization: Weighing the Risk of Build v. Buy," Electrical World, Vol. 209 (November 1995), pp. 25ff. 274

Until recently, the Indonesian state electric utility, PLN, United States) has undertaken three geothermal projects

was responsible for most electric power generation, expected to provide an additional 500 megawatts of

transmission, and distribution. In 1990, the Indonesian power.

government announced that it would actively encourage

private investment in power generation, including that

from foreign investors. Later, the government established

three operating subsidiaries. These operating subsidiaries

are slated to go public in 1997 and their shares will be

traded on the New York Stock Exchange. These com- 266

panies will be free to compete and create strategic

alliances with foreign companies in the growing number

of independent power projects that are currently

underway. 

Independent power projects in Indonesia are generally

financed through BOT arrangements. Indonesia’s rich 267

variety of energy resources provides an array of economical fuels to power electricity generation. The largest

projects currently planned (Paiton 1 and Paiton 2) will

consist of coal-fired power plants and involve investment

from General Electric and Mission Energy (both of the

United States), Mitsui (of Japan), Siemens (of Germany),

and PowerGen (of the United Kingdom). Duke and Fluor

Daniel (both of the United States) have been contracted to

build Paiton 1. 

In the Phillippines, the power sector is characterized by

continuous outages due to insufficient electricity supply.

Like Indonesia, the Phillippines plan to rely heavily on

private investment through BOT agreements. By the end

of 1993, a total of 27 contracts had been awarded for the

construction of power plants. The Philippines are planning to restructure and to privatize the National Power

Corporation, the country’s main state-owned utility.

One of the largest foreign investors in Philippine

electricity is the Hong Kong-based company Hopewell.

Hopewell is providing full financing for three oil and coalfired projects totaling 1,700 megawatts and partial (49

percent) funding for a 734-megawatt coal-fired plant. In

March 1996, it was reported that Enron is bidding on an

$800-million, 1200-megawatt gas-fueled power plant that

is to be operating in 1999. California Energy (of the 268

269

Other major foreign-investor led power projects in the

Philippines include a 93-megawatt coal and oil-fired unit

in Mindano, led by CMS Energy (of the United States),

and a 60-megawatt oil-fired unit financed equally by

Tomen (of Japan), General Electric Capital (of the United

States), and Wartsila Diesel (of Finland). 

Morocco’s reform of its electricity sector maintains the

current state-owned electricity distribution monopoly

(Office National de l’Electricite). However, private

companies are now allowed to generate power for sale.270

In April, 1996 CMS Generation’s (of the United States)

independent power unit finalized an agreement with the

Office National de l’Electricite. CMS and its 50-50 partner

Asea Brown Boveri Energy Ventures (the Swedish-Swiss

conglomerate) will each hold concession rights and an

agreement to sell electricity to the Office National de

l’Electricity for 30 years. The total cost of the initial 271

acquisition and the additional 660 megawatts will be $1.3

billion. Two other private-power projects in Morocco are

pending.272

Argentina

In terms of the number of companies with active

investments, Argentina holds the greatest interest among

all Latin American countries for foreign firms. A total of

28 companies have active projects underway in Argentina

(Table 8). Argentina already has sold more than 9,000-

megawatts of generating capacity and could sell as much

as 7,500 additional megawatts. A 2,700-megawatt hydroelectric plant is currently being offered to buyers. Much 273

additional generating capacity, transmission systems, and

other portions of the electricity industry are expected to be

offered for sale soon.274

Electricity companies and oil and gas companies (chiefly

from Chile and the United States) constitute almost all

foreign investment in Argentine power generation. The 
52 Energy Information Administration/ Privatization and the Globalization of Energy Markets

Table 8. Latin American Electricity Investment for Argentina, Bolivia, Chile, Colombia, and Peru, by Company and

Country

Company Argentina Bolivia Chile Colombia Peru

ABB Energy Ventures (Sweden) . . . . . . . . . . . . . . . GFE

AES Corp (U.S.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . HE

Amoco (U.S.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PG

British Gas (UK) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PG

Catalyst Energy Corp. (U.S.) . . . . . . . . . . . . . . . . . . GFE

Chilgener (Chile) ............................ OFP/GFE, HE

Chilquinta International Inc. (Chile) .............. OFP/GFE EPD

Cinergy (U.S.) .............................. -PG,EPD, PG

Citicorp Capital Investors (U.S.) ................ GFE, EPD

Citizens Power & Light (U.S.) . . . . . . . . . . . . . . . . . . CFP

CMS Energy (U.S.) .......................... HE, OFP/GFE

Cogenerex (U.S.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . PG

Constellation Energy (U.S.) . . . . . . . . . . . . . . . . . . . PG

Dominion Resources (U.S.) . . . . . . . . . . . . . . . . . . . GFE HE

Duke Power (U.S.) .......................... GFE, HE GFE 

Electricity de France (France) .................. HE, EPD, EPT

Endesa (Chile) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EPD HE, EPD 

Enersis S.A. (Chile) .......................... GFE, PG, EPD PG, EPD 

Enron (U.S.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GFE

Entergy Corp. (U.S.) ......................... GFE/OFP, EPT, EPD PG PG HE

General Public Utilities (U.S.) . . . . . . . . . . . . . . . . . . PG GFE

Houston Industries Inc. (U.S.) .................. CG, GFE, EPD, EPT

Iberdrola (Spain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . PG EPD

K & M Engineering and Consulting (U.S.) . . . . . . . . GFE

LG&E Energy Corp. (U.S.) . . . . . . . . . . . . . . . . . . . . GFE

LOS W S.A. (Chile) .......................... GFE, EPD

National Electric of Chile (Chile) . . . . . . . . . . . . . . . . PG

Northeast Utilities (U.S.) ...................... GFE, PG, CG

Northern States Power (U.S.) . . . . . . . . . . . . . . . . . . PG

NRG Energy (U.S.) . . . . . . . . . . . . . . . . . . . . . . . . . . PG

Nucleamiento Inversor S.A. (Chile) ............. HE,EPT

Ontario Hydro (Canada) . . . . . . . . . . . . . . . . . . . . . . EPD

PSI Resources (U.S.) ........................ GFE/OFP, EPD

Sevillana Electricidad (Spain) . . . . . . . . . . . . . . . . . . CFP

Societe Urbain (Chile) EPD

Southern Company (U.S.) ..................... PG, EPT

Southwestern Public Service (U.S.) . . . . . . . . . . . . . PG

 CFP=coal-fired plant; CG= cogeneration; EPD= electric power distribution; EPT= electric power transmission; GFE= gas-fired

electricity; HE= hydroelectric; OFP= oil-fired plant; PG= power generation (fuel unknown.

 Sources: Various company Annual Reports; the Mead Corporation, Lexis-Nexis; and Disclosure Incorporated, Compact

Disclosure.

Chilean companies, all of which are primarily electricity

companies, are Chilgener, Chilquinta, Enersis S.A., and

National Electric of Chile. The U.S. oil and gas companies

are Amoco and Enron. The U.S. electricity companies are

Cinergy, CMS Energy, Dominion Resources, Duke

PowerEntergy Corp, Houston Industries, LG&E,

Northeast Utilities, PSI Resources, and Southwestern

Public Service.

Bolivia

Bolivia’s new Electricity Law requires the separation of

electricity generation, transmission, and distribution. Any

companies engaged in one of these activities is required

by the law to divest itself of the other activities. Thus,

Bolivia, which already privatized its state electric utility,
Energy Information Administration/ Privatization and the Globalization of Energy Markets 53

Friedland, Jonathan, "New Jerseyan Has a Bright Idea in Bolivia," The Wall Street Journal (July 27, 1995), p. A8. 275

Friedland, Jonathan, "Plans by U.S. Utilities to Enter Chile Roil Power Sector With Fears of Glut," The Wall Street Journal (October 18, 1995), 276

p. A16.

WEFA Group, Latin America Monthly Monitor (January 1996), p. 30. 277

Energy Information Administration, International Energy Outlook 1995 (DOE/EIA-0484(95)) (Washington, DC, May 1995), p. 74. 278

Ende, is potentially restructuring all private firms engaged northern Chilean generation and transmission utility,

in their electricity industry. Edelnor. Further, Chile's state copper company is offering

The sale of its state electrical utility, Ende, made Bolivia companies with investment projects in Chile include the

one of the first South American countries to allow private U.S. electric companies Duke Power, which invested in

investors to enter its domestic electricity market. Ende was gas-fired power generation, and Entergy, which invested

broken into three regional generating companies, each of in power generation (Table 8).

which was purchased by a different foreign company.

The purchasers were almost without exception U.S. Although little foreign investment in Chilean electricity

companies (Table 8). The U.S. companies Dominion currently exists, a substantial increase in its generating in

Resources and Energy Initiatives (an affiliate of General capacity may occur in the next few years. By October 1995,

Public Utilities) each bought one of the three regional four U.S. companies had announced plans to build four

companies. The third regional company was purchased by gas-fueled plants in Chile.

a consortium headed by the Canadian company Bolivian

Generating Group, but included Baltimore Gas and

Electric and Pennsylvania Power and Light. The 275

regional companies averaged 174 megawatts of generating capacity and split 50 percent of ownership

amongst themselves (with Bolivia retaining the other 50-

percent ownership share) in exchange for an average of

$47 billion and the assumption of $38 billion of debt. The

purchasers will operate their plants for 5 years and also

have exclusive rights to build any new generating facilities for domestic or export markets. 

In addition to the privatization of Ende a few other

projects are underway. Most of these projects involve U.S.

electricity companies, including Catalyst Energy Corp,

Cogenerex, Entergy, and General Public Utilities.

Additionally, the Spanish electricity company Iberdrola

has made a power distribution investment.

Chile

Currently, there is little investment by foreign companies

in Chile’s electricity industry. Despite the similarity

between Chile’s electricity deregulation and the deregulation/privatization in Argentina, Bolivia, and Peru,

notably less investment has been made in Chile. Perhaps

part of the reason is that Chile’s privatization preceded

these countries’ privatizations by several years. Chilean

electricity companies, however, are making numerous

investments in other Latin American countries’ electricity

industries.

Some foreign investment is occurring in Chile. Southern

Company, through its international affiliate, Southern

Electric International, increased its ownership in the

25 percent of one of its power plants for sale. Other

276

Colombia and Peru

In Colombia, an effort to sell the state utility has begun.

Colombia’s congress has approved a privatization plan,

which affects at least 25 companies in many industries,

including the hydro and thermoelectric industry.277

Foreign companies actively investing in Colombia include

ABB Energy Ventures (Sweden/Switzerland), Citizens

Power and Light (United States), General Public Utilities

(United States), K&M Engineering and Consulting

(United States), and Northern States Power (United

States). All investment is in power generation, most of

which is gas-fired (Table 8). One notable exception is the

coal-fired generation investment of Citizens Power and

Light. 

Peru restructured its electricity industry into separate

generation, distribution, and transmission companies, as

have Argentina, Bolivia, and Chile. However, unlike 278

Bolivia and Chile, Peru has seen much foreign investment

in power distribution, in addition to power generation.

Most of the power generation investment has been in

hydroelectric generation. The companies active in Peru

include the Chilean companies Chilectra, Chilquinta,

Enersis S.A., and Endesa; the U.S. company Entergy; and

the Canadian company Ontario Hydro (Table 8). 

Brazil, Mexico, and Venezuela

Brazil, Mexico, and Venezuela are similar in that their

privatization efforts have been fairly limited. A total of

five foreign companies have invested in the electricity

industries of Brazil, Mexico, and Venezuela (Table 9).
54 Energy Information Administration/ Privatization and the Globalization of Energy Markets

Energy Information Administration, International Energy Outlook 1996 (DOE/EIA-0484(96)) (Washington, DC, May 1996), p. 86. 279

Energy Information Administration, International Energy Outlook 1996 (DOE/EIA-0484(96)) (Washington, DC, May 1996), p. 80. 280

Javetski, John, “International Privatization: Weighing the risk of build vs buy,” Electrical World, Vol. 209 (November 1995), p. 209. 281

Energy Information Administration, International Energy Outlook 1996 (DOE/EIA-0484(96)) (Washington, DC, May 1996), p. 86. 282

Petroleum Economist (June 1995), p. 125. 283

Table 9. Electricity Privatization Investment in Brazil, Mexico, and Venezuela, by Company and Country 

Company Brazil Mexico Venezuela

AES Corp (U.S.) . . . . . . . . . . . . . . . . . . . OO

Central & South West Corp. (U.S.) ..... JV-PG

Community Energy Alternatives (U.S.) . . PG

New World Power (U.S.) . . . . . . . . . . . . . PG 

PP&L Resources (U.S.) . . . . . . . . . . . . . PG 

Public Service Enterprise Group (U.S.) . IPP

 IPP= independent power production; JV= joint venture; OO= opened office; PG= power generation.

 Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; and Disclosure Incorporated, Compact

Disclosure.

Brazil enacted a 1993 law that allows large electricity substantial expansion of its power generation capacity,

consumers to build and operate their own generating which should provide ample opportunities for foreign

facilities and sell any excess power to a public utility. investment. However, only two companies, both based 279

A second electricity law is under consideration, which in the United States (Community Energy Alternatives and

would separate power generation, transmission, and Public Service Enterprise Group), have currently invested

distribution as has been done already in Argentina, in Venezuelan power generation.

Bolivia, Chile, and Peru.

Thus far, no foreign investment has actually been made in

Brazilian electricity. The single major electricity sale consumated involved the purchase of a stalled hydroelectric

plant by a Brazilian consortium. However, another

attempt by Brazil to entice foreign investment may be Due to recent reforms, both the Dominican Republic and

made soon with the offer of four regional subsidiaries of Trinidad have privatized their electricity industries. 

Electrobras, the Brazilan state utility. Also, AES Corp, a

U.S. electricity generator, has opened an office in Brazil, Although both of these countries are relatively small, they

which is one tangible sign of possible future foreign have experienced more foreign investment than many of

investment. Latin America’s larger economies (Table 10). The

Mexico’s attempt at electricity sector reform has consisted U.S. oil and gas companies; Destec Energy, Energy Initiaof recently passed legislation allowing private companies tive, and General Public Utilities, all of which are U.S.

to import power supplied as a private service to the electricity companies; and Honduras Electric Company.

private sector. However, any surplus power must be sold Oil-fired power generation investment was made in all

to the Mexican state utility company, CFE. Central and cases. 280

South West Company, New World Power, and PP&L

Resources (all U.S. companies) have power generation Trinidad also recently privatized its energy industry. U.S.

projects underway in Mexico, all of which will sell companies have provided all of the foreign investment in

wholesale power after completion. Trinidad’s electricity industry. Amoco’s investment in oil

Venezuela recently made its third unsuccessful attempt to its subsequent investment in Trinidad’s electric comsell state electric utility assets. Five state-owned pany. Southern Company (both directly and through its

generation and distribution companies with a total international affiliate Southern Electric International) has

generating capacity of nearly 5 gigawatts have now made numerous investments in power generation in

unsuccessfully been offered for sale. Venezuela plans Trinidad. 281

282

The Dominican Republic 

and Trinidad

Dominican Republic has attracted Coastal and Enron, both

and gas production in Trinidad appears to have motivated

283
Energy Information Administration/ Privatization and the Globalization of Energy Markets 55

Table 10. Electricity Privatization Investment in Costa Rica, Dominican Republic, Ecuador, El Salvador,

Guatemala, Honduras, and Trinidad, by Company and Country

Company Costa Rica Republic Ecuador Salvador Guatemala Honduras Trinidad

Dominican El 

Amoco (U.S.) . . . . . . . . . . . . . . . . . . . . OFP GFE

Coastal Corp. (U.S.) . . . . . . . . . . . . . . OFP

Destec Energy (U.S.) . . . . . . . . . . . . . OFP

Enron (U.S.) . . . . . . . . . . . . . . . . . . . . . PG OFP

General Public Utilities (U.S.) . . . . . . . PG 

Honduras Electric Company (U.S.) . . OFP

Illinova Corp. (U.S.) . . . . . . . . . . . . . . . PG

Northeast Utilities (U.S.) ........... W

Southern Company (U.S.) .......... CFP,PG, GFE

Tenneco (U.S.) . . . . . . . . . . . . . . . . . . PG

 CFP=coal-fired plant; GFE= gas-fired electricity; OFP= oil-fired plant; PG= power generation (fuel unknown); and W= wind power

generation.

 Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; and Disclosure Incorporated, Compact

Disclosure.
Energy Information Administration/ Privatization and the Globalization of Energy Markets 57

Energy Information Administration, International Energy Annual 1993, DOE/EIA-0219(93) (Washington DC, May 1995), p. viii. 284

The Mining Journal (July 1994), p. 105. 285

Energy Information Administration, International Energy Outlook 1996, DOE/EIA-0484(96) (Washington, DC, May 1996), p. 52. 286

"Buy Low: Foreigners have been buyers of U.S. coal properties. What do the buyers know that the sellers don’t?” Forbes (March 15, 1993), p. 287

50ff.

6. Recent Trends in International Investment 

and Trade in Coal

In recent years, the structure of the world’s coal industry are primarily from the United Kingdom, Germany, the

has undergone considerable change. European com- United States, and Australia. Interestingly, although Japan

panies--in particular, multinational conglomerates--have is the world’s largest importer of coal (and also the largest

increased their presence abroad in recent years. The importer of U.S. coal), Japanese companies have made

gradual removal of European coal subsidies may have relatively minor investments in coal assets abroad. Many

encouraged this trend. In the United States, as the role of of the world’s largest producers of coal are not publicly

European companies has grown more pronounced, U.S.- traded corporations. Neither are they multinational in

based industry participants have reduced their role. outlook. For instance, among the world’s largest

Prominent among the latter group have been several of producers of coal are the national coal companies of

the smaller independent coal producers, major U.S. Russia, India, and Ukraine.

petroleum companies, electric utilities, and domestic steel

manufacturers. As in the United States, foreign investment

has played a considerable role in Australia, the world’s

largest exporter of coal.

Coal accounts for 25 percent of global energy consumption, significantly less than crude oil (39 percent), but more

than natural gas (22 percent). Ninety percent of coal 284

production is consumed in the country of origin, primarily

for the generation of electricity. Although only about 10 285

percent of world coal production makes its way into

export markets, international trade in coal has grown

substantially in recent years. This has been particularly

true of steam coal. In 1985, international trade in steam

coal and metallurgical coal were roughly equal. By 2005,

steam coal trade is expected to be double metallurgical

coal trade. Between 1973 and 1994, international coal 286

trade doubled and is expected to increase by an additional

50 percent by 2010. A handful of nations--and companies-

-account for the bulk of this trade. Australia is the largest

exporter of coal, followed by the United States and South

Africa. In 1994, Japan was far and away the world’s

largest coal importer, followed by South Korea, Russia,

Taiwan, Germany, the Netherlands, and Great Britain.

Although the leading world coal-producing companies

include some state-owned companies, a handful of

multinational conglomerates figure very prominently in

worldwide coal trade and investment. These companies

United States

Foreign investors have become increasingly important in

U.S. coal over the past decade or so. The share of foreign

affiliates in U.S. coal production has grown from nearly

zero in the late 1970's to 29 percent in 1994. In 1994, three

of the top five U.S. coal-producing companies were

foreign-affiliated, accounting for more than one fifth of

total U.S. production. The largest foreign-affiliated

producer of coal in the United States (as well as the largest

producer of coal in the United States) is Peabody Holding

Company. Peabody’s parent corporation, the British firm

Hanson PLC, is the world’s second largest privatelyowned coal producer. The second largest foreign-affiliated

producer is Consol Coal, which is also the third largest

U.S. coal producer. Consol is a 50-50 joint venture

between DuPont and the German company, Rheinbraun

AG. Rheinbraun AG is the world’s largest privately held

coal producer. The third largest foreign-affiliated U.S. coal

producer is Kennecott Energy Company, which is owned

by the British company, RTZ PLC, the world’s biggest

mining group. Kennecott is the fourth largest producer of

coal in the United States.287

A number of factors contributed to the attractiveness of

the U.S. coal industry as a target of foreign investment. 
58 Energy Information Administration/ Privatization and the Globalization of Energy Markets

 China is both the leading producer and consumer of world coal. 288

Energy Information Administration, Form EIA-28, Financial Reporting System. 289

"Conference Concludes European Coal Subsidies Will End," Power Europe (December 2, 1994). 290

"Power to the People: Cracking Europe’s Electric Cartels," The Wall Street Journal (December 22, 1995), p. A5. 291

OECD/IEA, Oil and Gas Supply Outlook, 1995. 292

For one, the United States is the largest coal market open markets and from an extraordinary array of generous

to foreign investors. In addition to being the second largest subsidies, allowing European coal mines, which had

exporter of coal, the United States is the world’s second become vastly inefficient by world standards, to remain in

largest coal consumer and producer. Most of the operation. In Germany, for instance, subsidies have until 288

foreign investment in U.S. coal has been from Europe. recently been financed by a 7.5-percent levy on electricity

European coal companies are motivated in part to invest

in U.S. coal in order to secure sources of coal in the face of

declining European production. However, this motive is

apparently prospective rather than reflective of the current

patterns of production and imports of coal. That is, the

United Kingdom, which is the largest foreign investor in

U.S. coal, ranked tenth among coal importers; Germany,

the second largest investor, ranked twentieth. Japan,

Canada, France, Spain, Belgium, the Netherlands, and

Italy all imported more U.S. coal than the United Kingdom

and Germany, but these countries had little, if any, in the

way of U.S. coal investments.

Financial incentives are another possible motive for

investing in U.S. coal. Were it not for the widespread exit

of the U.S. major petroleum companies from domestic coal

mining, this motive might appear more plausible. It was

largely due to several years of financial under

performance among their coal segments that resulted in

the majors’ departure from U.S. coal. Only three times in

the last eighteen years did the majors’ profitability in coal

exceed the profitability of their consolidated operations.289

Possibly the key factor motivating UK and German

investors is that as inefficient European mines continue to

close, multinational European coal producers have had to

move abroad in order to remain in the coal business. As is

evident from the discussion below, the United States and

Australia (with their extensive coal reserves, established

export markets, and few impediments to foreign investors)

have gained prominence as targets for coal investments.

Europe 

In Western Europe, coal production is concentrated, with

the United Kingdom and Germany accounting for roughly

four-fifths of total production and Spain and France

accounting for most of the remainder. Until recently,

European coal producers benefitted from protected

bills. As a consequence, domestic coal prices in Germany

have been more than three times the import price. 290

In turn, electricity prices in Germany are the most expensive in Europe, and 70 percent more costly than in the

United States. However, the German coal industry has 291

been shrinking in recent years in order to comply with

European Union mandates and to remain competitive in

a global market place.

The restructuring of Europe’s coal industry is also due in

part to a shift to alternative fuels. The proportion of

Western Europe’s energy consumption fueled by coal fell

from around 80 percent in the 1950's to 25 percent in 1994.

In the future, European utilities are expected to move

toward greater usage of increasingly available North Sea

natural gas and away from coal.

As a result of the continued elimination of coal subsidies

and shift toward natural gas, the European coal industry

has been declining. In 1994, coal production in the United

Kingdom declined by over 60 percent from its 1980 level,

while Germany experienced a decline of almost 40 percent

in hard coal production. The larger reduction in coal

output in the United Kingdom was in part due to the

more forceful elimination of subsidies undertaken by the

British government. Germany has been behind schedule

in doing away with coal subsidies. For OECD Europe,

hard coal production is expected to fall from 187 million

metric tons in 1992 to 80 million metric tons in 2010.292

In contrast to Europe, U.S. coal production peaked in

1994, surpassing 1 billion short tons for the second time in

history. U.S. production in 1994 was 25 percent larger

than in 1980. Further, in future years, the United States is

expected to increase its coal output. Other countries

expected to boost coal production and exports in future

years include the largest and the third largest coal exporters, Australia and South Africa. Recent entrants into

the global coal trade include Colombia and Venezuela. 
Energy Information Administration/ Privatization and the Globalization of Energy Markets 59

Suttill, Keith R., "Coal in Europe," Coal (March 1995), p. 20. 293

Chadwick, John, "World Coal," Mining Magazine (September 1995), p. 146ff. 294

Coal Voice (June 1993), p. 1. 295

 Energy Information Administration, Country Energy Profiles, South Africa (Washington DC, August 1995), p. . 296

 Energy Information Administration, Country Energy Profiles, South Africa (Washington DC, August 1995), p. . 297

The Economist (December 23, 1995 - January 5, 1996), p. 126. 298

Interestingly, with the exception of South Africa, all of include Exxon, ARCO, and Peabody--all companies with

the aforementioned nation’s coal industries have seen major U.S. coal operations. The fifth largest exporter of

increasing levels of foreign direct investment from a Australian coal is Royal Dutch/Shell, which exited the

handful of multinational conglomerates. U.S. coal-producing industry in 1994.

Australia

Until recently, the United States was the world’s primary

source of coal exports. In 1970, the United States

accounted for one-half of the international coal trade.293

By 1994, the U.S. share of world coal trade had declined

to 15 percent of the total. In 1986, Australia supplanted

the United States as the world’s largest exporter of coal.

As recently as 1980, U.S. coal exports had been double

those of Australia.

Coal is Australia’s number one export. Some of the 294

companies most prominent in the U.S. coal industry are

also prominent in Australia’s coal industry, particularly

that part of the industry directed towards export

markets. As in the United States, foreign investment

plays a key role in Australia’s coal industry, further

indicating how multinational in character world coal

investment has become. Australia consumes less than a

third of domestic production (versus 90 percent in the

United States). 

Although 70 percent of Australia’s coal exports goes to

Japan, Japan’s investment in Australian coal is

comparatively small. Ownership of Australian coal 295

assets is largely held by Australian, U.S., and European

companies. The largest producer of coal in Australia is

the Australian multinational conglomerate, Broken Hill

Proprietary Company Limited (BHP). In addition to its

Australian coal mining operations, BHP is the 17th

largest coal producer in the United States, and also has

coal mining interests in Indonesia. The second largest

exporter of Australian coal is CRA Corp, an Australian

company which has recently merged with the British

company RTZ Corp. As noted earlier, RTZ Corp is the

fourth largest producer of coal in the United States.

Third among Australian coal producers is Cyprus Amax

Minerals Company, a U.S. multinational minerals

company and the second largest producer of coal in the

United States. Other major exporters of Australian coal

South Africa 

South Africa is the third largest exporter of coal. Coal

accounts for 98 percent of South African energy production and 78 percent of energy consumption. South 296

Africa ranks seventh in coal reserves. For most of the 297

last decade, United Nations’ sanctions have restricted the

flow of foreign direct investment to South African

industries. Even in 1994, the year in which sanctions

were lifted, foreign direct investment in South Africa

was less than in 1980. Although they are primarily 298

domestically-held corporations, South African coal

mining companies are among the largest in the world.

With the lifting of the U.N. sanctions in 1991, South

Africa coal mining could become a target of foreign

direct investment and a growing source of coal exports.

China

Coal is abundant and cheap in China. With the world’s

third largest deposits, China leads the world, both in the

production and the consumption of coal. In 1994, coal

accounted for 75 percent of the country’s total energy

consumption. The country’s heavy reliance on its most

available fuel is increasing as China’s economic growth

places greater demands on domestic petroleum supplies

and the potential for petroleum import dependence

increases. China’s proximity to major coal-importing

nations makes China an ideal exporter. Although rising,

the amount of Chinese coal exports has been small due

to domestic coal consumption requirements and poor

infrastructure for exports. Coal imports by Asian

countries are expanding primarily to meet rapidly

increasing demand in electric power generation.

There has been some attempt at reform in the industry.

Mine ownership has been partially redistributed from

the government to private parties. Currently, around

half of China’s coal production comes from

state-controlled mines and regional or local authorities.
60 Energy Information Administration/ Privatization and the Globalization of Energy Markets

 Energy Information Administration, Country Analysis Briefs, (January 1996). 299

 Energy Information Administration, Country Analysis Briefs, (January 1996). 300

Tse, Pui-Kwan, "China," Mining Annual Review (July 1995), p. 108ff. 301

"China Seeks Foreign Help to Exploit Vast Coal Reserves," Asian Economic News (October 9, 1995). 302

Amoco Corporation, Annual Report 1995, p. 15 and ARCO Coal Company, News Release (June 21, 1996). 303

Although Brazil is the second largest producer of coal, it is a net importer, whereas almost all of Venezuela’s coal production is directed 304

towards export markets.

Energy Information Administration, Energy Analysis Brief. 305

Kendall, Sarita, "Survey of Colombia," Financial Times (October 9, 1995), p. III. 306

The other half is produced by collective or privately

owned operations. Reforms also have extended to the 299

removal of price controls in early 1994.300

The industry is beginning, however, to attract foreign

participation. For instance, cooperative agreement was

announced between the government and an international

consortium to construct a $900-million underground coal

slurry pipeline running from Shanxi Province to coastal

Shandong. It will be the largest and longest such

installation in the world and will have annual capacity of

15 million tons upon completion. Later, the project is to be

expanded into an extensive coal slurry pipeline network.

The project is one of the first major infrastructure projects

in modern China to have western financial and management control. In addition, BHP Mineral & Oil Company 301

of Australia and two Chinese firms plan joint development of coalbed methane in North China’s Shanxi province. Amoco and ARCO are also exploring coal mining 302

interests.303

Colombia and Venezuela

Another important area of recent international investment

in coal lies in Latin America, primarily Colombia and

Venezuela. Colombia is far and away the largest producer

of coal in Latin America, followed by Brazil and

Venezuela. Colombia also has Latin America’s largest 304

coal reserves. Currently ranked ninth in the world in

terms of coal exports, Colombia is expected to play an

increasingly important role in world coal trade in the

future. Again, several of the companies investing in Latin

American coal mining are those with coal investments in

the United States and Australia. The Italian energy

company AGIP mines coal in Venezuela, as does Royal

Dutch/Shell and the German energy conglomerate

Ruhrkohl. AGIP and Veba also have coal mining

operations in the United States. Both Exxon and 305

Drummond have coal investments in Colombia. 306
Appendix

Worldwide

Privatization-Motivated

Energy Investment
Energy Information Administration/Privatization and the Globalization of Energy Markets

63

Appendix 

Worldwide Privatization-Motivated Energy Investment

Explanatory Notes

The company-venture tables in this appendix (this matrix

is also available electronically on a diskette in Lotus wk3

format and on the Internet FTP site at

ftp://ftp.eia.doe.gov.) contains summary information for

worldwide privatization-motivated energy investments

by companies. The investment abbreviation conventions

are provided at the end of these explanatory notes. 

The focus of the appendix is on the companies making the

investments, not the countries in which the investments

are made. Readers who wish to focus on countries rather

than on companies are assisted by separate groupings of

the countries as follows: OECD countries, Latin American

countries, socialist and formerly-socialist countries of

eastern and central Europe, Asian countries, and African

countries.

Companies with at least one energy investment or

prospect in one of the countries within a group are listed

across the top of the table; countries in the group with one

or more recently privatized energy industry are listed

along the left side of each table. The country of

incorporation of each company is listed above the

company name. Additional company-specific

information, if known, is listed below the company name.

This information includes: the primary SIC code of the

company (if known), parent/subsidiary/affiliate

companies (if any) also included in the appendix tables,

and the latest annual report for the company if the

company’s annual report was used as a source of

investment information. 

The reader should note that lower case abbreviations

indicate investment prospects and upper case

abbreviations indicate actual investment commitments.

Additionally, a few abbreviations are preceeded by a

minus/negative sign, which indicates the sale of an

investment asset or the abandonment of an investment

prospect. 

Although the key for the abbreviations employed in this

appendix is provided, a review of two included

companies may be instructive. 

Example 1. ABB Energy Ventures, a Swedish/Swiss

company has investments (owns equity) in gas-fired

electricity generation (GFE) in two countries, Colombia

and the United Kingdom. Additionally, ABB has a

prospective petrochemical investment (pc) in Uzbekistan

and a prospective geothermal investment (ge) in Pakistan.

Example 2. According to their 1995 annual report, AES

Corporation, a U.S. electric services company (SIC code

4911), has a prospective investment in electricity

generation fueled by coal, oil, and natural gas

(cfp/ofp/gfe) and an actual investment in hydroelectric

generation (HE) in Argentina. AES also has opened an

office (OO) in Brazil. In the United Kingdom, AES has

made investments in coal-fired, oil-fired, and gas-fired

electricity generation (respectively, CFP, OFP, and GFE).

AES has unspecified activities (*), which may be actual or

prospective investments, in both Hungary and Poland. In

China, AES has invested in hydroelectric power

generation and in dual-fueled power generation [coal and

oil (CFP/OFP)]. AES also has invested in coal-fired

electricity generation in India and oil-fired generation in

Pakistan, and is providing engineering services (NS) in

Pakistan. Finally, AES has prospective power generation

investments (pg) in Indonesia and Vietnam.
Energy Information Administration/Privatization and the Globalization of Energy Markets

64

Table A1. Matrix Abbreviations

Abbreviation Meaning

A ................................... Acreage

CBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coal Bed Methane

CFP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coal-fired Plant

CG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cogeneration

CP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coal Production

CW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consulting Work

D................................... Development

DR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drilling Rights

DS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drilling Services

E ................................... Exploration

EOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enhanced Oil Recovery

EPD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Electric Power Distribution

EPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Electric Power Transmission

ES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equipment Sales

GD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gas Distribution

GE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Geothermal

GFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gas-fired Electricity Generation

GP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gas Pipeline

GS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gas Storage

GT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gas Transmission

HE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hydroelectric

IPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Power Production

L ................................... Lubricants Plant

LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liquefied Natural Gas Facility

M .................................. Marketing

NS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Engineering Services

OF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Facility

OFP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oil-fired Plant

OO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opened Office

OP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oil Pipeline

P ................................... Production

PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Petrochemicals

PG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power Generation

R................................... Refining

S ................................... Solar Power

SW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Seismic Work

W .................................. Wind Power Generation

* ................................... Unspecified Activity

Upper case = investment

Lower case = investment prospect
Table A2. Privatization-motivated Energy Investment in OECD.

Country of Incorporation Switzerland U.S. U.S. U.S. U.K. Canada U.S. U.S. 

Sweden/

Company Ventures AES Corp Hess Amoco Petroleum Utilities, Ltd Corp Cinergy 

ABB Energy Amerada British Canadian South West 

Central &

Primary Business ofCompany (SIC Code) 3823 4911 2911 2911 2911 4922 4922 4931 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- 1995 -- 1995 1995 -- -- 1995 CountryAustralia .......... -- -- -- -- GFE -- -- -- 

New Zealand . . . . . . . . . -- -- -- -- -- -- -- -- Portugal . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Spain . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Sweden . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkey . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- United Kingdom ....... GFE,IPP E,IPP gd gd -- GFE d, GFE EPD 

CFP,OFP,GF EPD,IPP,PG,g

Table A2. Privatization-motivated Energy Investment in OECD (Continued).

Country of Incorporation U.S. Finland U.S. Japan U.S. U.S. U.S. U.K. Company Illinova Corp. Voima (IVO) Light Corp. Company Power Co. Knudsen Power PLC 

Imatran Power & Marubeni Energy Montana Morrison- National 

Kansas City Mission 

Primary Business ofCompany (SIC Code) 4931 -- 4911 5080 4911 4931 -- 4911 Parent/subsidiary -- -- -- Sithe) International) -- -- -- 

(parent of Edison

(subsidiary of

Year of Annual Report -- -- -- -- -- 1995 -- 1995 CountryAustralia ......... -- -- -- GFE GFE,CFP -- -- -- 

New Zealand . . . . . . . . -- -- PG -- -- -- -- -- Portugal . . . . . . . . . . . . -- -- -- -- -- -- PG PG Spain . . . . . . . . . . . . . . -- -- -- -- HE -- -- PG Sweden . . . . . . . . . . . . -- PG -- -- -- -- -- -- Turkey . . . . . . . . . . . . . -- -- -- -- PG -- -- -- United Kingdom . . . . . . CG GFE,IPP PG -- GFE,IPP GFE/CG -- -- 
Table A2. Privatization-motivated Energy Investment in OECD (Continued).

Country of Incorporation Norway U.S U.S. Canada U.S. U.S. U.S. Malaysia Company Norsk Hydro Utilities States Power Nova Corp NRG Energy Pacific G&E PacifiCorp Petronas 

Northeast Northern 

Primary Business ofCompany (SIC Code) 2870 4911 4931 4922 4931 4931 4911 -- Parent/subsidiary -- -- NRG Energy) -- States Power) -- -- -- 

(parent of Northern

(subsidiary of

Year of Annual Report 1994 -- 1995 -- -- -- -- -- CountryAustralia .......... -- -- CFP jv-GP CFP,EPT EPT PG,EPD jv-GT 

New Zealand . . . . . . . . . -- -- pg pg -- -- -- Portugal . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Spain . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Sweden . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkey . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- United Kingdom . . . . . . . gd pg,CG -- -- -- IPP -- -- 

Table A2. Privatization-motivated Energy Investment in OECD (Continued).

Country of Incorporation U.S. Germany U.S. U.S. U.S. Norway Norway U.S. Company SCECorp Siemens Energies Company International SF A.S. Resources 

Sithe Southern Electric Statkraft Statoil Norge Energy

Southern System

Primary Business ofCompany (SIC Code) 4911 3661 4911 4911 4911 4911 5541 4911 Parent/subsidiary -- -- Marubeni) International) Southern Co.) -- -- Entergy) 

(subsidiary of Southern Electric (subsidiary of (affiliate of

(parent of

Year of Annual Report -- -- -- 1995 -- -- 1995 -- CountryAustralia .......... IPP/CG,GFE,EPT GFE/IPP, CG -- -- -- -- PG 

New Zealand . . . . . . . . -- -- -- -- -- -- -- -- Portugal . . . . . . . . . . . . -- gfe -- -- -- -- -- -- Spain .............. IPP,HE -- -- -- -- -- -- -- 

Sweden . . . . . . . . . . . . -- -- -- -- -- PG -- -- Turkey . . . . . . . . . . . . . PG -- -- ns -- -- -- -- United Kingdom . . . . . . IPP -- -- OO,GFE,EPD,gd GFE -- gd -- 
Table A2. Privatization-motivated Energy Investment in OECD (Continued).

Country of Incorporation U.S. Japan France U.S. Company Texas Utilities Company Tomen Corp. TOTAL Utilicorp United West Primary Business ofCompany (SIC Code) 4911 -- 1311 4932 Parent/subsidiary -- -- -- -- Year of Annual Report 1995 -- 1995 1995 CountryAustralia .......... EPD -- -- jv-PG,jv-EPD 

New Zealand . . . . . . . . . -- -- -- EPD Portugal . . . . . . . . . . . . . -- -- -- -- Spain . . . . . . . . . . . . . . . -- -- -- -- Sweden . . . . . . . . . . . . . -- -- -- -- Turkey . . . . . . . . . . . . . . -- -- pg -- 

United Kingdom . . . . . . . -- GFE,IPP gd pg,epd,GD,gd 

Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; and Disclosure Incorporated, Compact Disclosure and W
Table A3. Privatization-motivated Energy Investment in Latin America.

Country of Incorporation Switzerland U.S. Canada U.S. U.S. U.S. Australia U.S. 

Sweden/

Company Ventures AES Corp Energy Corp Co Petrol Corp Amoco Ltd. Smith 

ABB Energy Alberta Electric Power International Ampolex Anderman- 

American American 

Primary Business ofCompany (SIC Code) -- 4911 1311 4911 1311 2911 1311 -- Parent/subsidiary -- -- Resources) -- -- -- -- 

(parent of

Chieftain

Energy --

Year of Annual Report -- 1995 1995 1995 -- 1995 -- -- CountryArgentina . . . . . . . . . . . . -- c/ofp/gfe,HE E,P,gp -- -- A,E,P,PG,pc P -- Bolivia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Brazil . . . . . . . . . . . . . . . -- OO -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . GFE -- -- -- P A,E,D,P, gp -- -- 

Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . -- -- -- -- -- A,E,jv-P -- -- 

El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- -- -- m, gp -- -- Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . -- -- -- -- A, jv-E,P a -- -- 

Trinidad . . . . . . . . . . . . . . -- -- -- -- -- E,D,P,EOR,lng,GFE -- A 

Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- CW -- A,a, E, p -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. U.S. U.S. U.S. U.S. France U.S. Company Corp ARCO International Corp Corp G&E International Ltd 

Arcadian Energy Exploration Petroleum Baltimore Petroleum International, 

Argosy Aspen Aviva Basic Resources 

Basic

Primary Business ofCompany (SIC Code) 2873 1311 -- 1311 1311 4911 2911 6799 Parent/subsidiary -- -- Resources) -- Resources) -- -- Texas Utilities) 

(affiliate of (affiliate of

Garnet Garnet (subsidiary of

Year of Annual Report -- 1995 -- -- -- -- -- -- CountryArgentina . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Bolivia . . . . . . . . . . . . . . . . -- -- -- -- -- PG -- -- Brazil . . . . . . . . . . . . . . . . -- -M -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . . -- -- e -- A,E,P -- -- -- 

Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . -- E,D -- -- -- -- -- -- El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- E op,R 

Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- -- -- E -- -- -- -- Nicaragua . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . -- A -- -- -- -- -- -- Trinidad . . . . . . . . . . . . . . . pc A,e -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . . -- P,EOR,r -- -- -- -- -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. Canada British V.I. Australia U.K. U.K. Australia Company Group Inc. Group Bridas Corp USA, Inc British Gas Petroleum Company 

Besicorp Bolivian Power Bridge Oil British Proprietary C

Broken Hill

Primary Business ofCompany (SIC Code) 3433 4911 1311 5170 4923 2911 1311 Parent/subsidiary -- -- -- -- -- -- -- Year of Annual Report 1995 1995 -- -- 1995 1995 -- CountryArgentina .......... -- pg P E e,PG,GP -- E,P,pg,gp 

Bolivia . . . . . . . . . . . . . . . -- PG -- -- GP,A,a -- E,P 

Brazil . . . . . . . . . . . . . . . -- pg -- -- gfe,gp -- gfe,gp 

Chile . . . . . . . . . . . . . . . . -- -- -- -- gfe,gp,GP E,P, gfe E 

Colombia . . . . . . . . . . . . -- -- -- -- gp E,P,op,gp E,P Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . -- -- -- -- -- -- -- El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . OO -- -- -- -- -- E Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . -- pg -- -- -- -- -- Trinidad . . . . . . . . . . . . . . -- -- -- -- D,P,M, lng -- E 

Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- -- -- A,E,P,EOR,OP E,D 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation Canada Canada U.S. U.S. Canada U.S. Canada Chile Company Occidental Ltd Energy Corp. Corp Resources Chevron Inc. Chilectra 

Canadian Resources Catalyst South West Chauvco International 

CAPCO Central & Chieftain 

Primary Business ofCompany (SIC Code) 1311 1311 1389 4931 1311 1311 1311 4911 Parent/subsidiary -- Inc.) -- -- -- -- Co., Ltd.) Enersis) 

(parent of

Saba (subsidiary of

Petroleum Alberta Energy (subsidiary of

Year of Annual Report 1995 -- -- -- 1995 1995 -- -- CountryArgentina .......... -- -- -- -- P ES -- EPD 

Bolivia . . . . . . . . . . . . . . . -- -- PG,GFE -- -- -A,E,SW -- -- 

Brazil . . . . . . . . . . . . . . . -- -- -- -- -- PC -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia ............ A,e,E P,OP -- -- -- E,P -- -- 

Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- -- 

Dominican Republic . . . . -- -- -- -- -- -- -- -- Ecuador ............. E,D,P -- -- -- -- -- -- 

El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- jv-PG -- * -- -- Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . D,P -- -- -- -- A,E,D E EPD 

Trinidad . . . . . . . . . . . . . . -- -- -- -- -- A -- -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela ........... OO,a,e,d -- -- -- -- A,l,eor -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. Company Cinergy Investors Light Energy CMS Energy Coastal Cogenerex Energy Inc. 

Citicorp Citizens Clayton 

Capital Power & Williams Cogentrix 

Primary Business ofCompany (SIC Code) 4931 -- -- 1311 4931 2911 4911 -- Parent/subsidiary -- -- -- -- and Gas) -- -- -- 

(parent of 

Nomeco Oil 

Year of Annual Report 1995 -- -- -- 1995 1995 -- -- CountryArgentina .........

-PG,EPD,PG, GT,HE,OFP/G

GP GFE,EPD -- -E,gp FE P,m -- -- 

Bolivia . . . . . . . . . . . . . . -- -- -- -- -- -- PG PG Brazil . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . GP -- -- gp gp -- -- -- Colombia . . . . . . . . . . . A -- CFP -- P -- -- -- Costa Rica . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . -- -- -- -- -- OFP -- -- Ecuador . . . . . . . . . . . . A -- -- -- D,P,GP -- -- 

El Salvador . . . . . . . . . . -- -- -- -- -- gfe,OFP -- -- Guatemala . . . . . . . . . . -- -- -- -- -- ofp -- -- Honduras . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . -- -- -- -- P -- -- -- 

Nicaragua . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . -- -- -- a -- E -- -- Trinidad . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . GP -- -- -- GS -- -- -- Venezuela . . . . . . . . . . A -- -- A A,eor -- -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. Australia U.S. France U.S. German U.S. Company Hydro Energy Resources Inc. Corexland CPC Deminex Energy 

Consolidated Constellation Coplex Petroleum Destec 

Cordex

Primary Business ofCompany (SIC Code) 4911 -- -- -- -- -- -- 8711 Parent/subsidiary -- Co.) -- -- -- -- Wintershall) -- 

(subsidiary of

BG&E and

Potomac

Electric Power (affiliate of

Year of Annual Report -- -- -- -- -- -- 1994 -- CountryArgentina .......... PG -- -- E -- -- E,P -- 

Bolivia . . . . . . . . . . . . . . . -- PG -- -- -- -- -- -- Brazil . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . -- -- A -- -- A -- -- Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- -- -- -- OFP Ecuador . . . . . . . . . . . . . -- -- -- -- -- P -- -- El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- -- -- -- -- pg 

Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Trinidad . . . . . . . . . . . . . . -- -- -- -- -- -- A -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- -- P -- -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. U.K. U.S. U.S. France France U.S. Company Digicon Inc. Resources Drummond Duke Power de Nemours France (EdF) Elf Aquitaine Natural Gas 

Dominion E.I. du Pont Electricite de El Paso 

Primary Business ofCompany (SIC Code) 1382 4911 4911 2911 4911 2911 4922 

--

Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- 1995 -- 1995 -- -- 1995 1995 CountryArgentina ........... D,P GFE -- epd, GFE,HE * HE,EPD,EPT -- -- 

Bolivia . . . . . . . . . . . . . . . . E HE -- pg -- -- A,E,P -- 

Brazil . . . . . . . . . . . . . . . . -- -- -- * -- -- -- 

--

Chile . . . . . . . . . . . . . . . . . -- -- GFE -- -- -- -- 

--

Colombia . . . . . . . . . . . . . -- -- CP -- * -- -- -- Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . -- -- -- -- -- -- E,P -- El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- -- -- -- * -- -- jv-gfe,gp 

Nicaragua . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . -- -- -- -- -- -- A,e A,gfe 

Trinidad . . . . . . . . . . . . . . . -- -- -- -- * -- e -- Uruguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . . -- -- -- -- * -- E -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. Chile U.S. U.S. U.S. Italy U.S. Company Resources Inc. Enersis S.A. Corp. Enron Corp. (ENI) Entergy Corp. 

Energy Energy Nazionale

Equipment Initiative Enova Enserch Idrocarburl 

Ente

Primary Business ofCompany (SIC Code) -- -- 4911 4911 1321 4922 2911 4911 Parent/subsidiary -- Utilities) -- -- -- -- AGIP) -- 

(IPP

subsidiary

of General

Public (parent of

Year of Annual Report -- -- -- -- 1995 1995 1994 1995 CountryArgentina . . . . . . . . . . . . -- -- GFE,PG,EPD -- GT,GFE -- A GFE/OFP,EPT,EPD,-

Bolivia . . . . . . . . . . . . . . . -- PG -- -- gp,pg -- -- PG 

Brazil . . . . . . . . . . . . . . . DS -- -- -- gp -- -- pg Chile . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- PG Colombia . . . . . . . . . . . . -- -- -- -- GP,gt,-gp,cg, ofp -- -- -- 

Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . -- PG -- -- PG -- -- -- Ecuador . . . . . . . . . . . . . -- -- -- -- -- -- A -- El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- OFP -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- gp -- jv-gp&gfe -- -- 

Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . -- -- PG,EPD -- -- -- -- HE,ofp Trinidad . . . . . . . . . . . . . . -- -- -- -- A,P -- A -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- -- A,pc -- CP -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. U.S. Australia U.S. U.K. U.S. France Company Inc. Exxon Drilling Resources Fluor Daniel Corp. Resources France (GDF) 

Equitable First Foster 

Resources, Falcon Australian Wheeler Garnet Gaz de 

Primary Business ofCompany (SIC Code) 4923 2911 1381 -- 8711 2911 1311 4923 Parent/subsidiary -- -- -- -- -- -- Petroleum) -- 

(parent of

Argosy Energy

and Aviva

Year of Annual Report -- 1995 -- -- -- -- -- -- CountryArgentina . . . . . . . . . . . . . -- A,R,M -- E -- -- -- -- Bolivia . . . . . . . . . . . . . . . . -- E -- -- -- -- -- CW Brazil . . . . . . . . . . . . . . . . -- -- -- -- -- OO -- -- Chile . . . . . . . . . . . . . . . . . -- -- -- -- -- pc -- -- Colombia . . . . . . . . . . . . . A,e A,E,P,-P,-op,CP -- -- gp -- A,e,d,p,op -- 

Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- -- CW -- gfe -- -- -- Nicaragua . . . . . . . . . . . . . -- R -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . -- A -- -- -- -- -- -- Trinidad . . . . . . . . . . . . . . . -- E -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- gp,gs 

Venezuela . . . . . . . . . . . . -- e,E,d,p,lng -- -- -- pc -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. Canada U.S. Honduras U.S. U.S. Spain Company Resources Energy Corp Co., Ltd Company Company Inc. Power Iberdrola 

Global Hondo Oil Honduras Houston

Natural Harken Home Oil and Gas Electric Houston Industries Light &

Primary Business ofCompany (SIC Code) 1311 1311 1311 2911 -- 4911 4911 4911 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- -- -- -- -- 1995 -- -- CountryArgentina . . . . . . . . . . . . P -- D D -- CG,GFE,EPD,EPT PG PG 

Bolivia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- EPD Brazil . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . -- A,-A,e,E -- E,D,gp -- -- -- -- Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- OFP -- -- -- Ecuador . . . . . . . . . . . . . -- -- -- -- -- -- -- -- El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Trinidad . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- -- -- -- -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. Kuwait U.K. U.S. U.S. U.S. U.S. U.S. Company & Consulting Corp. Lasmo Cogen, Inc. Exploration Corp Co. Energy Corp. 

K&M Kuwait Latin Louisiana

Engineering Petroleum American Land & LG&E Energy Marathon Oil Maxus 

Primary Business ofCompany (SIC Code) -- -- 1311 -- 1311 4911 1311 1311 Parent/subsidiary -- -- -- -- -- -- USX) YPF) 

(subsidiary of (subsidiary of 

Year of Annual Report -- -- -- -- 1995 -- -- -- CountryArgentina . . . . . . . . . . . . -- -- -- -- -- GFE S -- Bolivia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- E,P Brazil . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . GFE -- A,e,P cg D,P -- -- -A,P 

Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . -- P -- -- -- -- -- P El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Trinidad . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- -- A,sw -- -- A,E,P 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation Japan Japan U.S. U.K. U.S. Chile U.S. U.S. Company Mitsubishi Mitsui & Co. Mobil Oil Co. Chile Pipeline Power 

Monument Murphy Oil Electric of Navajo New World 

National

Primary Business ofCompany (SIC Code) 5050 6221 1311 1311 2911 4911 4922 4911 Parent/subsidiary -- -- -- -- -- -- Holly Corp) -- 

(subsidiary of 

Year of Annual Report -- -- 1995 -- -- -- -- -- CountryArgentina . . . . . . . . . . . . . -- -- P,M E -- PG -- PG Bolivia . . . . . . . . . . . . . . . . -- -- a,E -- -- gp -- -- Brazil . . . . . . . . . . . . . . . . -- -- -- -- -- pg -- OO,PG Chile . . . . . . . . . . . . . . . . . -- gfe M -- -- -- -- -- Colombia . . . . . . . . . . . . . -- -- M -- -- pg -- -- Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- e,E -- -- -- -- -- Ecuador . . . . . . . . . . . . . . -- -- SW,jv-P,M -- P pg -- -- 

El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- -- M,l -- -- -- gp PG Nicaragua . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . -- -- a, E,jv-D,M -- A pg -- -- Trinidad . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . . lng -- A,E,r,M,L -- -- pg -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S U.S. Canada U.S. U.S. Canada Company NorAm Energy Utilities States Power Nova Corp NRG Energy Occidental Chemicals 

Northeast Northern Occidental 

Primary Business ofCompany (SIC Code) 4923 4911 4931 3081 4931 2812 -- Parent/subsidiary -- -- Energy) -- Power) MidCon Gas) -- 

(parent of NRG Northern States (parent of

(subsidiary of

Year of Annual Report 1995 -- 1995 -- -- 1995 -- CountryArgentina . . . . . . . . . . . . . . -- GFE,PG,CG -- GP,gp -- -P,E -- 

Bolivia . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Brazil . . . . . . . . . . . . . . . . . -- -- -- -- -- PC -- Chile . . . . . . . . . . . . . . . . . . -- -- -- -- -- PC -- Colombia . . . . . . . . . . . . . . gp -- PG -- PG P -- Costa Rica . . . . . . . . . . . . . -- W -- -- -- -- -- Dominican Republic . . . . . . -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . . -- -- -- -- -- e,P -- El Salvador . . . . . . . . . . . . . -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . . -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . . -- -- * -- * -- -- Mexico . . . . . . . . . . . . . . . . gp -- -- d -- PC -- Nicaragua . . . . . . . . . . . . . . -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . . -- -- -- -- -- A,E,P A Trinidad . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . . . -- -- -- gs -- -- -- Venezuela . . . . . . . . . . . . . -- -- -- -- -- EOR,E,P -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation Canada U.S. U.S. U.S. U.S. U.S. U.S. Company Ontario Hydro Corp. Co. Enterprises Pacific G&E Parsley Pennzoil P

Opon

Development Oryx Energy Pacific Parker & 

Primary Business ofCompany (SIC Code) 4911 -- 1311 4923 4931 1311 2911 Parent/subsidiary -- -- -- -- -- -- -- Year of Annual Report -- -- 1995 -- -- -- -- CountryArgentina . . . . . . . . . . . . -- -- -- gd -- E jv-M Bolivia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Brazil . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- GP -- -- Colombia . . . . . . . . . . . . -- gp,E,D -- -- -- -- -- 

Costa Rica . . . . . . . . . . . -- -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . -- -- a,A,P -- -- -- -- 

El Salvador . . . . . . . . . . . -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- jv-gd gp,jv-gfe -- -- Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . EPD -- -- -- -- -- L Trinidad . . . . . . . . . . . . . . -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . -- -- -- -- -- -- a,A,r,pc 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation Argentina U.S. U.K. U.S. U.S. U.S. U.S. Canada Company Pluspetrol Resources PLC Petroleum PSI Resources Group Minerals Corp Ranger Oil 

PP&L Premier Oil Pride Enterprise Quintana

Public

Service

Primary Business ofCompany (SIC Code) -- 4911 1311 1389 4911 4931 -- 1311 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- -- 1995 1995 -- -- -- 1995 CountryArgentina . . . . . . . . . . . . . -- -- -- DS GFE/OFP, EPD,ns -- P -- Bolivia . . . . . . . . . . . . . . . . -- PG -- -- -- -- -- -- Brazil . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- 

Chile . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . . -- -- -- DS -- -- -- -- 

Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . -- -- -- -- -- -- -- A El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- PG -- -- -- -- -- -- Nicaragua . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . e,d PG -- -- -- -- A A,-E,E 

Trinidad . . . . . . . . . . . . . . . -- -- A,P -- -- -- -- -- Uruguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . . -- -- -- DS -- IPP -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation German U.S. U.S. U.S. U.S. Spain U.S. U.S. Company AG Co. G&E Resources Power Electricidad Shell Oil Cogeneration 

Ruhrkohle Petroleum San Diego Sante Fe American Sevillana Smith 

Saba Latin 

Scudder

Primary Business ofCompany (SIC Code) 1222 1311 4931 1311 -- -- 2911 -- Parent/subsidiary -- Ltd.) -- -- -- -- Dutch/Shell) -- 

(subsidiary of

CAPCO (subsidiary of

Resources, Royal

Year of Annual Report -- -- -- -- -- -- 1995 -- CountryArgentina . . . . . . . . . . . . . -- -- -- p,pg,gp -- -- -- -- 

Bolivia . . . . . . . . . . . . . . . . -- -- -- DR -- -- -- -- Brazil . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . . -- P -- -- -- CFP -- -- Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- -- -- -- -- -- pg Ecuador . . . . . . . . . . . . . . -- -- -- a,A -- -- -- -- El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- -- jv-gd -- -- -- PC -- 

Nicaragua . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . -- -- -- -- A,gfe -- -- -- 

Trinidad . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uruguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Venezuela . . . . . . . . . . . . CP -- -- -- -- -- -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. U.S. U.S. Norway U.S. U.S. Argentina U.S. Company Company International Public Service Statoil Norge A.S. Inc. Resources S.A. Tenneco Inc. 

Southern Electric Southwestern Sun Co. Energy International 

Southern System Technica 

Techint CIA

Primary Business ofCompany (SIC Code) 4911 4911 4911 5541 2911 4911 -- 3523 Parent/subsidiary International) Southern Co.) -- -- -- of Entergy) -- -- 

(parent of

Southern

Electric (subsidiary of (subsidiary

Year of Annual Report 1995 -- -- 1995 -- -- -- -- CountryArgentina . . . . . . . . . . . . . -- -- PG -- -- PG -- gp Bolivia . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- gp 

Brazil . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- gfe,gp Chile ................. PG,EPT PG,EPT -- -- -- -- -- gp, gfe 

Colombia . . . . . . . . . . . . . -- -- -- -- DR,-P -- -- -- 

Costa Rica . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . -- -- PG -- -- -- -- -- El Salvador . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala . . . . . . . . . . . . -- -- -- -- -- -- -- -- Honduras . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . -- -- -- -- -- -- -- gp Nicaragua . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Trinidad ............... CFP,PG, GFE GFE -- -- -- -- -- -- 

Uruguay . . . . . . . . . . . . . . ns -- -- -- -- -- gs -- Venezuela . . . . . . . . . . . . -- -- -- P,eor, jv-orimulsion -- -- -- -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation U.S. Japan France Canada Canada U.S. U.S. U.S. Company Company Tomen Corp. TOTAL Energy Pipelines Corp. Corp. Petroleum 

Texas Vetco

Utilities Transalta TransCanada Triton Energy International Union Texas 

Tuboscope

Primary Business ofCompany (SIC Code) 4911 -- 1311 4911 4923 1311 1389 1311 Parent/subsidiary Resources) -- -- -- -- -- -- -- 

(parent of

Basic

Year of Annual Report 1995 -- 1995 -- -- 1995 1995 -- CountryArgentina . . . . . . . . . . . . . . -- -- P HE -- A,E ES,CW E 

Bolivia . . . . . . . . . . . . . . . . . -- -- A,E -- -- -- -- -- Brazil . . . . . . . . . . . . . . . . . -- -- -- -- -- -- * -- Chile . . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Colombia . . . . . . . . . . . . . . -- gp A,P,OP -- op A,P,OP OO -- Costa Rica . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Dominican Republic . . . . . . -- -- -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . . . -- -- -- -- -- A, e, -A -- -- El Salvador . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Guatemala ............. op,R -- -- -- -- A -- -- Honduras . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . . . -- -- -- -- gp -- * -- Nicaragua . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Panama . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Paraguay . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Trinidad . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- 

Uruguay . . . . . . . . . . . . . . . -- -- M -- -- -- -- -- Venezuela . . . . . . . . . . . . . -- -- E -- -- -- * -- 
Table A3. Privatization-motivated Energy Investment in Latin America (continued).

Country of Incorporation Germany U.S. Finland Germany U.S. Argentina Company Veba AG Vintage Petroleum Wartsila Diesel Wintershall WPL Holdings YPF YukPrimary Business ofCompany (SIC Code) 5122 1311 -- 2911 4931 1311 Parent/subsidiary -- -- -- -- -- Energy Corp.) 

(Parent of Maxus

Year of Annual Report -- 1995 -- 1994 -- -- CountryArgentina .......... P A,P OFP -- -- -- 

Bolivia . . . . . . . . . . . . . . . -- -- -- -- -- DR,E,M 

Brazil . . . . . . . . . . . . . . . -- -- -- -- -- -- Chile . . . . . . . . . . . . . . . . -- -- -- -- -- E,M Colombia . . . . . . . . . . . . -- -- -- -- -- * Costa Rica . . . . . . . . . . . -- -- -- -- -- -- Dominican Republic . . . . -- -- -- -- -- -- Ecuador . . . . . . . . . . . . . -- A -- -- -- P El Salvador . . . . . . . . . . . -- -- -- -- -- -- Guatemala . . . . . . . . . . . -- -- -- -- -- -- Honduras . . . . . . . . . . . . -- -- -- -- -- -- Mexico . . . . . . . . . . . . . . -- -- -- -- NS -- Nicaragua . . . . . . . . . . . . -- -- -- -- -- -- Panama . . . . . . . . . . . . . -- -- -- -- -- -- Paraguay . . . . . . . . . . . . -- -- -- -- -- -- Peru . . . . . . . . . . . . . . . . A -- -- -- -- A,-A,M 

Trinidad . . . . . . . . . . . . . . A -- -- A -- -- Uruguay . . . . . . . . . . . . . -- -- -- -- -- -- Venezuela . . . . . . . . . . . A,E -- -- -- -- A Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; Disclosure Incorporated, Compact Disclosure and Worldscope Disclosure; a

Energy, Office of Oil and Natural Gas Policy, U.S. Energy Ventures in Latin America (March 1996).
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation Switzerland U.S. U.S. U.S. Germany U.S. U.S. U.S. Brit

Sweden/

Company Ventures AES Corp Power Co Amoco Aral ARCO Gas Co. Blue Star Brida

ABB Energy Electric Benton Oil &

American

Primary Business ofCompany (SIC Code) 3823 4911 4911 2911 -- 1311 1311 -- 1Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- 1995 1995 1995 -- 1995 -- -- CountryAlbania . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Armenia . . . . . . . . . . . . -- -- -- -- -- -- -- -- Azerbaijan . . . . . . . . . . -- -- -- D -- -- -- -- Belarus . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Bulgaria . . . . . . . . . . . . -- -- -- -- -- -- -- -- 

Croatia . . . . . . . . . . . . . -- -- -- m -- -- -- -- Czech . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Estonia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Georgia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Hungary . . . . . . . . . . . . -- * -- -- -- -- -- jv-A 

Kazakhstan . . . . . . . . . -- -- -- -- -- -- -- -- 

Kyrgyzstan . . . . . . . . . . -- -- -- -- -- -- -- -- Latvia . . . . . . . . . . . . . . -- -- -- jv-d -- -- -- -- Lithuania . . . . . . . . . . . . -- -- -- -- -- -- -- -- Poland . . . . . . . . . . . . . -- * -- A,E,M M -- -- -- 

Romania . . . . . . . . . . . . -- -- -- A,E,m -- A -- -- Russia . . . . . . . . . . . . . -- -- CW E,D -- E,D,R,M p -- 

Slovakia . . . . . . . . . . . . -- -- -- -- -- -- -- -- Slovenia . . . . . . . . . . . . -- -- -- -- -- -- -- -- Tajikistan . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkmenistan . . . . . . . . -- -- -- -- -- -- -- -- Ukraine . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uzbekistan . . . . . . . . . . pc -- -- -- -- -- -- -- Yugoslavia . . . . . . . . . . -- -- -- -- -- -- -- -- 
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation U.K. Australia Canada U.S. U.S. U.S. U.S. U.K. Company Petroleum Company Occidental Chevron Cinergy Corporation Conoco PLC 

British Proprietary Canadian Coastal Petroleum 

Broken Hill Dana

Primary Business ofCompany (SIC Code) 2911 3312 1311 1311 4931 2911 2911 -- Parent/subsidiary -- -- -- -- -- -- du Pont) -- 

(subsidiary of 

Year of Annual Report 1995 -- 1995 1995 1995 1995 -- -- CountryAlbania . . . . . . . . . . . . . . . -- A,E,D -- A -- -- -- -- 

Armenia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Azerbaijan ............ jv-a,D -- -- a -- -- -- -- 

Belarus . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Bulgaria . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Croatia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Czech . . . . . . . . . . . . . . . . M -- -- -- CW -- jv-R -- 

Estonia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Georgia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Hungary . . . . . . . . . . . . . . M -- -- -- -- jv-A,sw M -- 

Kazakhstan ........... jv-E,SW -- D,p D,jv-P,OP -- -- -- -- Kyrgyzstan . . . . . . . . . . . . -- -- -- -- -- -- -- -- Latvia . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Lithuania . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Poland . . . . . . . . . . . . . . . m -- -- ES -- -- M -- Romania . . . . . . . . . . . . . . -- -- jv-A,E -- -- -- -- -- 

Russia . . . . . . . . . . . . . . . m E -- -- -- -- E,D,jv-P A 

Slovakia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Slovenia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Tajikistan . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkmenistan . . . . . . . . . . -- -- -- -- -- -- -- -- Ukraine . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uzbekistan . . . . . . . . . . . . -- -- -- -- -- -- -- -- Yugoslavia . . . . . . . . . . . . -- E,D,P -- -- -- -- -- -- 
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation France France U.S. Italy U.K. U.S. U.S. France Company France (EdF) Elf Aquitaine Enron (ENI) Enterprise Oil Enterra Corp. Exxon France 

Electricite de Idrocarburl Gaz de 

Ente

Nazionale 

Primary Business ofCompany (SIC Code) 4911 2911 1321 2911 1311 7359 1311 4923 Parent/subsidiary -- -- -- AGIP) -- -- -- -- 

(parent of

Year of Annual Report -- 1995 1995 1994 1995 -- 1995 -- CountryAlbania . . . . . . . . . . . . . . -- -- -- -A -- -- -- Armenia . . . . . . . . . . . . . -- -- -- -- -- -- -- Azerbaijan . . . . . . . . . . . -- e -- D -- -- OO,e,E,D gp Belarus . . . . . . . . . . . . . . -- -- -- -- -- -- -- Bulgaria . . . . . . . . . . . . . -- A -- -- A,E,r -- -- 

Croatia . . . . . . . . . . . . . . -- -- -- -- -- -- -- Czech . . . . . . . . . . . . . . . -- -- -- jv-R,M -- -- M -- 

Estonia . . . . . . . . . . . . . . -- -- -- -- -- -- -- Georgia . . . . . . . . . . . . . . -- -- -- -- -- -- -- Hungary . . . . . . . . . . . . . PG -- -- -- -- -- M -- Kazakhstan . . . . . . . . . . -- E -- E,jv-P,OP,SW -- cw OO,SW,E,e * 

Kyrgyzstan . . . . . . . . . . . -- -- -- -- -- -- -- Latvia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Lithuania . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Poland . . . . . . . . . . . . . . CFP -- PG M -- -- a,M -- Romania . . . . . . . . . . . . . -- A -- -- jv-A,m -- -- -- 

Russia . . . . . . . . . . . . . . -- a,-A -- D,jv-P, -- -- OO,E,e,D gp,jv Slovakia . . . . . . . . . . . . . -- -- -- jv-M -- -- M GS 

Slovenia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Tajikistan . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkmenistan . . . . . . . . . -- -- -- -- -- -- -- -- Ukraine . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uzbekistan . . . . . . . . . . . -- -- E,D -- -- -- -- -- Yugoslavia . . . . . . . . . . . -- -- -- -- -- -- -- -- 
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation Russia Germany U.S. U.S. U.S. Japan Japan U.S. Company Lukoil Mannesman Co. Energy Corp. International Mitsubishi Mitsui & Co. Mobil 

Marathon Oil Maxus McDermott 

Primary Business ofCompany (SIC Code) -- 3560 1311 1311 1629 5050 6221 1311 Parent/subsidiary -- -- USX) YPF) -- -- -- -- 

(subsidiary of (subsidiary of

Year of Annual Report -- -- -- -- -- -- -- 1995 CountryAlbania . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Armenia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Azerbaijan . . . . . . . . . . . . D -- -- -- D -- -- a Belarus . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Bulgaria . . . . . . . . . . . . . . -- -- -- A -- -- -- -- Croatia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Czech . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Estonia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Georgia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Hungary . . . . . . . . . . . . . . -- -- -- -- -- -- -- jv-A,M 

Kazakhstan . . . . . . . . . . . OP -- -- -- -- -- -- OP 

SW,jv-E,D,P,

Kyrgyzstan . . . . . . . . . . . . -- -- -- -- -- -- -- -- Latvia . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Lithuania . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Poland . . . . . . . . . . . . . . . -- -- -- -- -- -- -- M Romania . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Russia . . . . . . . . . . . . . . . -- -- E,D -- D E,D E,D e,d,M 

Slovakia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Slovenia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Tajikistan . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkmenistan . . . . . . . . . . -- r -- -- -- -- -- -- Ukraine . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uzbekistan . . . . . . . . . . . . -- -- -- -- -- -- r -- Yugoslavia . . . . . . . . . . . . -- -- -- -- -- -- -- -- 
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation Norway U.S. U.S. U.S. Sweden Austria U.S. U.S. Company Norsk Hydro States Power NRG Energy Occidental Petroleum OMV Co. Pennzoil 

Northern OK Oryx Energy 

Primary Business ofCompany (SIC Code) 2870 4931 4931 2812 -- 2911 1311 2911 Parent/subsidiary -- NRG Energy) States Power) -- -- -- -- -- 

(parent of Northern

(subsidiary of

Year of Annual Report 1994 1995 -- 1995 -- -- 1995 -- CountryAlbania . . . . . . . . . . . . . . -- -- -- A -- A -- -- Armenia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Azerbaijan . . . . . . . . . . . -- -- -- -- -- -- -- D Belarus . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Bulgaria . . . . . . . . . . . . . -- -- -- -- -- A,r -- -- Croatia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Czech . . . . . . . . . . . . . . . -- * * -- -- -- -- -- Estonia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Georgia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Hungary . . . . . . . . . . . . . -- -- -- jv-A -- jv-gp -- -- 

Kazakhstan . . . . . . . . . . -- -- -- -- -- -- E,D,OP -- Kyrgyzstan . . . . . . . . . . . -- -- -- -- -- -- -- -- Latvia . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Lithuania . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Poland . . . . . . . . . . . . . . -- -- -- -- M -- -- -- Romania . . . . . . . . . . . . . -- -- -- A,DR -- -- -- -- Russia . . . . . . . . . . . . . . E,D -- -- jv-E,EOR -- -- -- * 

Slovakia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Slovenia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Tajikistan . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkmenistan . . . . . . . . . -- -- -- -- -- -- -- -- Ukraine . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uzbekistan . . . . . . . . . . . -- -- -- -- -- -- -- -- Yugoslavia . . . . . . . . . . . -- -- -- -- -- -- -- -- 
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation U.K. U.S. Russia /UK U.S. U.S. Norway U.S. 

The

Netherlands

Company PLC Petroleum Rosneft Dutch/Shell Company Corp A.S. Tenneco Inc. 

Premier Oil Pride Royal Investment Snyder Oil Statoil Norge 

Samson

Primary Business ofCompany (SIC Code) 1311 1389 -- 1311 -- 1311 5541 2653 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report 1995 1995 -- 1995 -- 1995 1995 -- CountryAlbania . . . . . . . . . . . . . . A,E -- -- E -- -- -- -- Armenia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Azerbaijan . . . . . . . . . . . -- -- -- -- -- -- jv-a,D -- 

Belarus . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Bulgaria . . . . . . . . . . . . . -- -- -- M -- -- -- -- Croatia . . . . . . . . . . . . . . -- -- -- M -- -- -- -- Czech . . . . . . . . . . . . . . . -- -- -- jv-R,M -- -- -- -- 

Estonia . . . . . . . . . . . . . . -- -- -- M -- -- M -- Georgia . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Hungary . . . . . . . . . . . . . -- -- -- M -- -- -- IPP Kazakhstan . . . . . . . . . . -- -- -- SW jv-P -- a,SW,E -- Kyrgyzstan . . . . . . . . . . . -- -- -- -- -- -- -- -- Latvia . . . . . . . . . . . . . . . -- -- -- M -- -- M -- Lithuania . . . . . . . . . . . . . -- -- -- M -- -- M -- Poland . . . . . . . . . . . . . . -- -- -- A,M -- -- M -- Romania . . . . . . . . . . . . . -- -- -- A,E,M -- -- -- -- 

Russia . . . . . . . . . . . . . . -- DS P,R,M E,D,P,M -- P,OP -- -- Slovakia . . . . . . . . . . . . . -- -- -- M -- -- -- -- Slovenia . . . . . . . . . . . . . -- -- -- M -- -- -- -- Tajikistan . . . . . . . . . . . . -- -- -- -- -- -- -- -- Turkmenistan . . . . . . . . . -- -- -- -- -- -- -- -- Ukraine . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Uzbekistan . . . . . . . . . . . -- -- -- -- -- -- -- -- Yugoslavia ......... -- -- -- -- -- -- -- -- 
Table A4. Privatization-motivated Energy Investment in Socialist and Formerly-Socialist Nati

Country of Incorporation France Belgium U.S. Switzerland GermanyCompany TOTAL Tractebel SA Unocal Corp Vitol WintershallPrimary Business ofCompany (SIC Code) 1311 4931 2911 -- 2911Parent/subsidiary -- -- -- -- --Year of Annual Report 1995 -- 1995 -- 1994CountryAlbania . . . . . . . . . . . . . . -- -- -- -- --Armenia . . . . . . . . . . . . . -- -- -- -- --Azerbaijan . . . . . . . . . . . -- -- D -- --Belarus . . . . . . . . . . . . . . -- -- -- -- --Bulgaria . . . . . . . . . . . . . -- -- -- -- --Croatia . . . . . . . . . . . . . . -- -- -- -- --Czech . . . . . . . . . . . . . . . M,r -- -- -- --Estonia . . . . . . . . . . . . . . -- -- -- -- --Georgia . . . . . . . . . . . . . . -- -- -- -- --Hungary . . . . . . . . . . . . . M,r cg -- -- --Kazakhstan .......... SW,E -- -- r --

Kyrgyzstan . . . . . . . . . . . -- -- -- -- --Latvia . . . . . . . . . . . . . . . -- -- -- -- --Lithuania . . . . . . . . . . . . . -- -- -- -- --Poland . . . . . . . . . . . . . . M -- -- -- --Romania . . . . . . . . . . . . . -- -- -- -- --Russia .............. jv-EOR, p -- -- -- *

Slovakia . . . . . . . . . . . . . -- -- -- -- --Slovenia . . . . . . . . . . . . . -- -- -- -- --Tajikistan . . . . . . . . . . . . -- -- -- -- --Turkmenistan . . . . . . . . . -- -- e,m,op,gp -- --

Ukraine . . . . . . . . . . . . . . -- -- -- -- --Uzbekistan . . . . . . . . . . . -- -- -- -- --Yugoslavia ........... -- -- -- -- --Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; Disclosure Incorporated, Compact Disclosure and Worldscope Disclosure; U

Office of Oil and Natural Gas Policy, Foreign Energy Ventures in the Former Soviet Union and Eastern Europe (July 1996); U.S. Department of Energy, Offic

Policy, U.S. Energy Ventures in the Former Soviet Union and Eastern Europe (July 1996); U.S. Department of Energy, Office of Oil and Natural Gas Policy, 

the Baltic States and Eastern Europe (May 1996); and U.S. Department of Energy, Office of Oil and Natural Gas Policy, U.S. Energy Ventures in the Baltic S

(May 1996).
Table A5. Privatization-motivated Energy Investment in Asia.

Country of Incorporation Switzerland U.S. U.S. U.S. U.S. U.S. U.S. U.S. 

Sweden/

Company Ventures AES Corp Hess Co Amoco Anadarko Apache ARCO 

ABB Energy Amerada Electric Power 

American 

Primary Business ofCompany (SIC Code) 3823 4911 2911 4911 2911 1311 1311 1311 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- 1995 -- 1995 1995 1995 1995 1995 CountryCambodia . . . . . . . . . . . -- -- -- -- -- -- A -- China . . . . . . . . . . . . . . PG HE,CFP/OFP -- JV,CFP, pg,CW A,D,cp SW -- A,E,p,R,PC,cbm India . . . . . . . . . . . . . . . -- CFP -- -- eor, s,cbm -- * -- 

Indonesia . . . . . . . . . . . -- pg -- -- -- E -- E Laos . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . -- -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . -- -- -- -- -A -- -- -- Pakistan . . . . . . . . . . . . ge OFP,IPP,NS -- CW s -- -- -- 

Philipines . . . . . . . . . . . GFE -- -- -- -- -- -- -- Thailand . . . . . . . . . . . . -- -- -- -- -- -- -- -- Vietnam . . . . . . . . . . . . -- pg A -- -- -- -- A 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.S. U.K. U.K. Australia U.S. U.S. Canada Canada Company BJ Services British Gas Petroleum Company Inc. Caltex Occidental Ltd Re

British Proprietary Energy Co., Canadian Resources C

Broken Hill California CAPCO

Primary Business ofCompany (SIC Code) 1389 4923 2911 1311 4911 -- 1311 1311 Parent/subsidiary -- -- -- -- -- Texaco (50%)) -- -- 

(Chevron

(50%) &

Year of Annual Report 1995 1995 1995 -- -- 1995 1995 -- CountryCambodia . . . . . . . . . . . -- E -- -- -- m -- -- China . . . . . . . . . . . . . . -- -- A,M,pc A,E,P,CBM -- LNG,M,L -- -- 

India . . . . . . . . . . . . . . . -- D,gd -- E,D -- L,lpg,m -- -- Indonesia . . . . . . . . . . . -- gp,pg * CP GE * -- -- Laos . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . -- GFE M -- -- -- -- -- Myanmar . . . . . . . . . . . -- -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . -- E,gp,pg -- -- -- -- -- pg 

Philipines . . . . . . . . . . . -- p,gp,pg -- -- GE, HE M -- -- Thailand . . . . . . . . . . . . -- gd L -- -- R -- -- Vietnam . . . . . . . . . . . . DS A,P,gp,pg,cw jv-A,E,cw,L A,E,D,P -- m A,E -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.K. U.S. U.S. U.S. U.K. U.S. U.S. Hong Kong Company Petroleum CMS Energy Corporation Energy Inc. Corp. Alternatives Conoco (CEPA) 

Clyde Coastal Cogentrix Development Energy Power Asia 

Commonwealth Community Electric

Consolidated

Primary Business ofCompany (SIC Code) 1311 4911 2911 -- -- -- 2911 1629 Parent/subsidiary -- -- -- -- -- Group) du Pont) Hopewell) 

(subsidiary of

Public Service

Enterprise (subsidiary of (subsidiary of

Year of Annual Report -- 1995 1995 -- -- -- -- -- CountryCambodia . . . . . . . . . . . -- -- -- -- -- -- -- -- China . . . . . . . . . . . . . . -- e,p A,OFP,pg -- -- CFP,cfp e,d,jv-R -- 

India . . . . . . . . . . . . . . . -- GFE -- pg -- ge -- -- Indonesia . . . . . . . . . . . P -- e -- -- -- -- -- Laos . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . -- -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . -- -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . -- -- cfp,gfe -- -- -- -- -- 

Philipines . . . . . . . . . . . -- C/OFP -- -- CFP -- -- CFP Thailand . . . . . . . . . . . . -- -- -- -- -- -- -- -- Vietnam . . . . . . . . . . . . A -- -- -- -- -- jv-e,r -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation German U.S. U.S. U.S. U.S. U.S. France Company Deminex Energy Duke Power Nemours International Energy Co. Elf Aquitaine E

Destec E.I. du Pont de Edison Edison Mission

Primary Business ofCompany (SIC Code) -- 8711 4911 2911 4911 4911 2911 Parent/subsidiary Wintershall) -- -- Conoco) Energy) International) -- 

(affiliate of (parent of Edison Mission Edison

(parent of (subsidiary of

Year of Annual Report 1994 -- -- -- 1995 1995 1995 CountryCambodia . . . . . . . . . . . . -- -- -- -- -- -- -- China . . . . . . . . . . . . . . . -- -- PG * * * A,E,M,pc GF

India . . . . . . . . . . . . . . . . -- -- -- * pg pg M A,E,D,G

Indonesia . . . . . . . . . . . . E,P -- jv-CFP,EPD * jv-CFP jv-CFP -- 

Laos . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . . -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . . -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . . -- pg -- * * * -- jv-O

Philipines . . . . . . . . . . . . -- -- -- * * * -- Thailand . . . . . . . . . . . . . -- -- -- -- * * -- Vietnam . . . . . . . . . . . . . -- -- -- -- * * A,M LP
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation Italy U.S. U.K. U.S. U.S. U.K. U.S. Company Idrocarburl (ENI) Corp. Enterprise Oil Louisiana Exxon Corp. Fluor Daniel 

Ente Nazionale Entergy Company of Wheeler 

Exploration Foster

Primary Business ofCompany (SIC Code) 2911 4911 1311 -- 1311 2911 8711 Parent/subsidiary (parent of AGIP) -- -- -- -- -- -- Year of Annual Report 1994 1995 1995 -- 1995 -- -- CountryCambodia . . . . . . . . . . . . -- PG a,E -- -- -- -- China ............... A,E,jv-E,jv-P, jv-R pg -- A A,SW,e,r,M,pc,IPP -- -- 

India . . . . . . . . . . . . . . . . -- -- -- -- -- cfp -- Indonesia . . . . . . . . . . . . -- -- -* -- -- -- CFP 

Laos . . . . . . . . . . . . . . . . -- -- -A -- -- -- -- Malaysia . . . . . . . . . . . . . -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . . -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . . -- OFP,HE -- -- -- -- -- 

Philipines . . . . . . . . . . . . -- -- -- -- -- -- -- 

Thailand . . . . . . . . . . . . . -- -- -- -- -- -- -- Vietnam . . . . . . . . . . . . . -- -- A,E -- OO,M -- -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation Hong Kong U.S. Canada Japan Japan Japan Japan Company Energy Industries Inc. Develop Corp. Harima Itochu Corp. Oil Corp. JHN Group 

Hopewell Houston Hydro Energy Ishikawajima- Japan National J

Primary Business ofCompany (SIC Code) 1622 4911 -- 3530 5050 -- -- Parent/subsidiary CEPA) -- -- -- -- -- -- 

(parent of

Year of Annual Report -- 1995 -- -- -- -- -- CountryCambodia . . . . . . . . . . . . -- -- -- -- -- -- -- China . . . . . . . . . . . . . . . CFE -- -- -- jv-A A jv-A,P India . . . . . . . . . . . . . . . . pg CFP,jv-OFP -- -- -- -- -- Indonesia . . . . . . . . . . . . pg -- -- -- -- -- -- Laos . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . . -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . . -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . . -- PG -- OFP -- -- -- Philipines ............ OFP,CFP -- he,pg -- -- -- -- 

Thailand . . . . . . . . . . . . . -- -- -- -- -- -- -- Vietnam . . . . . . . . . . . . . -- -- -- -- A A,E,D -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.S. U.S. U.S. S. Korea Kuwait U.K. S.Korea U.S. Company Light Kerr-Mcgee Kiewit Energy Power Corp. Corp. Lasmo LG Group Exploration 

Kansas City Korea Kuwait Louisiana

Power & Electric Petroleum Land & 

Primary Business ofCompany (SIC Code) 4911 1311 -- 4911 -- 1311 -- 1311 Parent/subsidiary -- -- -- -- -- -- -- -- 

Year of Annual Report -- 1995 -- -- -- -- -- 1995 CountryCambodia . . . . . . . . . . . . -- -- -- -- -- -- -- -- China . . . . . . . . . . . . . . . PG A,D -- -- A -- -- -- India . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Indonesia . . . . . . . . . . . . -- D GE -- -- -- -- D,P Laos . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . . -- -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . . -- -- -- -- -- -- -- Philipines . . . . . . . . . . . . -- -- GE OFP -- -- -- -- Thailand . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Vietnam . . . . . . . . . . . . . -- A -- -- -- A,D jv-r -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.S. U.S. Japan Japan U.S. G.Britain U.S. U.S. Company Energy Corp. Company Mitsubishi Mitsui & Co. Mobil Monument Oil Power Co. Co. 

Maxus Energy Montana Murphy Oil 

Mission

Primary Business ofCompany (SIC Code) 1311 4911 5050 6221 1311 1311 4931 2911 Parent/subsidiary YPF) International) -- -- -- -- -- -- 

(subsidiary of Edison

(subsidiary of

Year of Annual Report -- -- -- -- 1995 -- 1995 -- CountryCambodia . . . . . . . . . . . -- -- -- -- -- -- -- -- China . . . . . . . . . . . . . . A PG A A OO,P,M,L -- -- A 

India . . . . . . . . . . . . . . . -- pg,PG -- -- -- -- cfp -- 

Indonesia . . . . . . . . . . . -- jv-CFP -- jv-CFP D,gfe -- -- -- Laos . . . . . . . . . . . . . . . -- -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . -- -- -- -- M -- -- -- Myanmar . . . . . . . . . . . -- -- -- -- -- -- -- -- Pakistan . . . . . . . . . . . . -- PG -- OFP -- -- -- -- Philipines . . . . . . . . . . . -- PG -- -- -- -- -- -- Thailand . . . . . . . . . . . . -- PG -- -- M -- -- -- Vietnam . . . . . . . . . . . . -- -- A,E,D A A,E,cw A -- -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation Japan Norway U.S. U.S. U.S. U.S. ACompany Nippon Oil Norsk Hydro Power NRG Energy Occidental Ogden Products O

Northern States

Primary Business ofCompany (SIC Code) 2911 2873 4931 4931 2812 4953 2Parent/subsidiary -- -- Energy) Power) -- -- 

(parent of NRG Northern States

(subsidiary of

Year of Annual Report -- 1994 1995 -- 1995 -- CountryCambodia . . . . . . . . . . . . . -- -- -- -- -- -- China . . . . . . . . . . . . . . . . A,E -- -- -- A,DR -- India . . . . . . . . . . . . . . . . . -- -- -- -- -- -- Indonesia . . . . . . . . . . . . . -- -- -- -- -- -- Laos . . . . . . . . . . . . . . . . . -- -- -- -- lng -- Malaysia . . . . . . . . . . . . . . -- -- -- -- -- -- Myanmar . . . . . . . . . . . . . E -- -- -- -- -- Pakistan . . . . . . . . . . . . . . -- -- he he A,e,SW,jv-P,-P pg 

Philipines . . . . . . . . . . . . . -- -- -- -- -- -- Thailand . . . . . . . . . . . . . . -- -- -- -- PC -- Vietnam . . . . . . . . . . . . . . -- A,E -- -- A,E -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.S. U.S. Belgium Malaysia U.S. U.K. U.K. Company Pacific G&E Pennzoil Petrofina S.A. Petronas Petroleum PowerGen Premier Oil plc 

Phillips E

Pu

Primary Business ofCompany (SIC Code) 4931 2911 1311 -- 2911 4911 1311 Parent/subsidiary -- -- -- -- -- -- -- Year of Annual Report -- -- -- -- -- 1995 1995 Cambodia . . . . . . . . . . . . . -- -- -- -- -- -- E China . . . . . . . . . . . . . . . . pg -- -- A jv-A,P pg A,E 

India ................. OFP,gfe m -- -- -- GFE -- 

Indonesia . . . . . . . . . . . . . -- -- -- -- -- jv-CFP A,e 

Laos . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . . . -- -- -- -- -- -- -- Myanmar . . . . . . . . . . . . . -- -- -- -- -- -- A,E Pakistan . . . . . . . . . . . . . . -- -- -- -- -- -- E,P,ipp 

Philipines . . . . . . . . . . . . . -- -- -- -- -- -- -- Thailand . . . . . . . . . . . . . . -- -- -- -- -- -- -- Vietnam . . . . . . . . . . . . . . -- -- A,E A,E,D,P,jv-r -- -- -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation /U.K. U.S. Australia U.S. Germany U.S. U.S. U.S. 

The Netherlands

Company Dutch/Shell Resources Santos Ltd SCECorp Siemens Energies Cogeneration Corp 

Royal Sante Fe Sithe Smith Snyder Oil 

Primary Business ofCompany (SIC Code) 1311 1311 1311 4911 3661 4911 -- 1311 Parent/subsidiary -- -- -- Energy) -- Marubeni) -- -- 

(parent of 

Edison 

Mission (subsidiary of 

Year of Annual Report 1995 -- 1995 -- -- -- -- 1995 CountryCambodia . . . . . . . . . . . . . M -- -- -- -- -- -- -- China ................ A,r,P,jv-R,M -- OO PG -- OFP -- -- India . . . . . . . . . . . . . . . . . E,M -- -- pg,PG -- gfe pg d,P 

Indonesia . . . . . . . . . . . . . E,M -- E,P CFP jv-CFP -- -- -- 

Laos . . . . . . . . . . . . . . . . . M -- -- -- -- -- -- -- Malaysia .............. E,P,R,M,PC,LNG -- -- -- -- -- -- -- 

Myanmar . . . . . . . . . . . . . -- A -- -- -- -- -- -- Pakistan .............. E,R,M -- -- PG -- -- cfp -- Philipines ............. E,R,M -- -- PG -- -- -- -- Thailand .............. E,P,R,M,PC -- -- PG -- -- -- -- Vietnam .............. A,E,D,M -- -- -- -- -- -- a,e,d 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.S. Norway U.S. U.S. Japan France U.S. Company Public Service A.S. Texaco Inc. EcoTek Tomen Corp. TOTAL Corp. U

Southwestern Statoil Norge Thermo Triton Energy

Primary Business ofCompany (SIC Code) 4911 1311 1311 4911 -- 1311 1311 Parent/subsidiary -- -- -- -- -- -- -- Year of Annual Report -- 1995 -- -- -- 1995 1995 CountryCambodia . . . . . . . . . . . . . -- -- -- -- -- M,P -- China . . . . . . . . . . . . . . . . -- A,DR A,jv-E,jv-P,P -- -- m,R,PC jv-p, A, 

India . . . . . . . . . . . . . . . . . -- -- -- PG -- jv-r -- 

Indonesia . . . . . . . . . . . . . -- -- -- -- -- E,pg -- Laos . . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- Malaysia . . . . . . . . . . . . . . -- R -- -- -- -- -- Myanmar . . . . . . . . . . . . . -- -- E -- -- E,M -- Pakistan .............. he,pg -- -- -- OFP,IPP -- -- Philipines . . . . . . . . . . . . . -- -- -- -- jv-OFP -- -- 

Thailand . . . . . . . . . . . . . . -- P -- -- -- P -- Vietnam . . . . . . . . . . . . . . -- jv-A,E -- -- -- A,E,P,-r,M -- 
Table A5. Privatization-motivated Energy Investment in Asia (Continued).

Country of Incorporation U.S. U.S. U.S. Saudi Arabia S.KoreaCompany Energy Resources WPL Holdings Xenel Group Limited

West Coast Western Yukong

Primary Business of Company (SIC Code) -- 4911 4931 -- 2911Parent/subsidiary -- -- -- -- --Year of Annual Report -- -- -- -- 1995CountryCambodia . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- PG -- -- rIndia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- NS -- --Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . PG -- -- -- A,eLaos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --Myanmar . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- OFP --Philipines . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; Disclosure Incorporated, Compact Disclosure and Worldscope Disclosure; U

Office of Oil and Natural Gas Policy, U.S. Energy Ventures in China (May 1996); U.S. Department of Energy, Office of Oil and Natural Gas Policy, U.S. Ener

1995); U.S. Department of Energy, Office of Oil and Natural Gas Policy, U.S. Energy Ventures in Pakistan (May 1995); and U.S. Department of Energy, Offic

Policy, U.S. Energy Ventures in South Asia (June 1996).
Table A6. Privatization-motivated Energy Investment in Africa.

Country of Incorporation Switzerland U.S. U.S. U.S. U.S. U.K. U.K. Australia 

Sweden/

Company Ventures Amoco Anadarko ARCO Ashland British Gas Petroleum Company 

ABB Energy British Proprietary 

Broken Hill

Primary Business ofCompany (SIC Code) 3823 2911 1311 1311 2911 4923 2911 1311 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- 1995 1995 1995 -- 1995 1995 -- CountryAlgeria . . . . . . . . . . . . . . -- -- E,P E,EOR -- -- e,p E,D Ivory Coast . . . . . . . . . . . -- -- -- -- -- -- -- -- Morocco ............. jv-ipp -- -- -- -- -- -- -- 

Mozambique . . . . . . . . . . -- -- -- -- -- -- -- -- Nigeria . . . . . . . . . . . . . . -- -- -- -- P A E -- Yemen . . . . . . . . . . . . . . -- A,E -- A -- E -- E,D 

Table A6. Privatization-motivated Energy Investment in Africa (Continued).

Country of Incorporation U.S. U.S. U.S. France France U.S. Italy U.S. Company CMS Energy Conoco de Nemours Elf Aquitaine France Enron (ENI) Exxon 

E.I. du Pont Electricite de Idrocarburl 

Ente

Nazionale 

Primary Business ofCompany (SIC Code) 4911 2911 2911 2911 4911 1321 2911 1311 Parent/subsidiary and Gas) du Pont) Conoco) -- -- -- -- -- 

(parent of

Nomeco Oil (subsidiary of (parent of

Year of Annual Report 1995 -- -- 1995 -- 1995 1994 1995 CountryAlgeria . . . . . . . . . . . . . -- -- -- -- -- -- A DR Ivory Coast . . . . . . . . . . -- -- -- -- PG -- -- -- Morocco ............ cfe,pg,jv-ipp -- -- -- -- -- -- -- Mozambique . . . . . . . . . -- -- -- -- -- pg/gp -- -- Nigeria . . . . . . . . . . . . . -- A * P -- e,d,gp E,D D 

Yemen . . . . . . . . . . . . . A -- -- E -- lng A P 
Table A6. Privatization-motivated Energy Investment in Africa (Continued).

Country of Incorporation U.K. U.S. U.S. Finland Norway U.S. Austria U.S. Company Lasmo Exploration Mobil Neste Oy Norsk Hydro Occidental OMV Co. 

Louisiana

Land & Oryx Energy

Primary Business ofCompany (SIC Code) 1311 1311 1311 2911 2873 2812 2911 1311 Parent/subsidiary -- -- -- -- -- -- -- Year of Annual Report -- 1995 1995 -- 1994 1995 -- 1995 CountryAlgeria ............. E E,SW A A -- D -- E,D 

Ivory Coast . . . . . . . . . . -- -- -- -- -- -- -- -- Morocco . . . . . . . . . . . . -- -- -- -- -- -- -- -- Mozambique . . . . . . . . . -- -- -- -- -- -- -- -- Nigeria . . . . . . . . . . . . . -- -- P -- -- A -- -- Yemen . . . . . . . . . . . . . A D -- -- E jv-P E -- 

Table A6. Privatization-motivated Energy Investment in Africa (Continued).

Country of Incorporation U.S. Spain U.K. Norway U.S. U.S. France U.S. 

The

Netherlands/

Company Petroleum Repsol Dutch/Shell A.S. Sun Co. Inc. Texaco Inc. TOTAL Unocal Corp 

Phillips Royal Statoil Norge 

Primary Business ofCompany (SIC Code) 2911 2911 1311 3111 2911 1311 1311 2911 Parent/subsidiary -- -- -- -- -- -- -- -- Year of Annual Report -- -- 1995 1995 -- -- 1995 1995 CountryAlgeria . . . . . . . . . . . . . DR e,d -- -- A A E,d,P -- Ivory Coast . . . . . . . . . . -- -- -- -- -- -- -- -- Morocco . . . . . . . . . . . . -- -- -- -- -- -- M -- Mozambique . . . . . . . . . -- -- -- -- -- -- -- -- Nigeria . . . . . . . . . . . . . P -- E,P,M E DR P E,M -- 

Yemen . . . . . . . . . . . . . -- -- A -- A -- E,LNG E 

Sources: Various company annual reports; The Mead Corporation, Lexis-Nexis; Disclosure Incorporated, Compact Disclosure and Worldscope Disclosure; U

Office of Oil and Natural Gas Policy, U.S. Energy Ventures in West and Southwest Africa (June 1995); and U.S. Department of Energy, Office of Oil and Nat

Ventures in North and East Africa (November 1995).